Choose the correct answer for each question.

1. What is the definition of consumer surplus?

   1.   ?    The total value placed on products by the marke
   2.   ?    The total value placed on products by consumers
   3.   ?    The difference between the consumer's willingness to pay and and the price actually paid for the product.
   4.   ?    The difference between the consumer's willingness to pay and the firm's cost of the product.

2. Which of the following is a true statement about the effect of a government-imposed minimum price floor when the price set is above the normal free market price?

   1.   ?    If the government imposes a price floor, consumer surplus will increase
   2.   ?    If the government imposes a price floor, all firms in the market will gain
   3.   ?    If the government imposes a price floor, there will be a shortage
   4.   ?    If the government imposes a price floor, total consumer surplus will decrease

3. Consumer surplus in a market will tend to be higher when demand is

   1.   ?    price elastic
   2.   ?    price inelastic
   3.   ?    income elastic
   4.   ?    income inelastic

4. An increase in market demand for a normal good other things being equal will lead to

   1.   ?    A rise in both consumer and producer surplus
   2.   ?    A fall in both consumer and producer surplus
   3.   ?    A rise in consumer surplus and a fall in producer surplus
   4.   ?    A fall in consumer surplus and a rise in producer surplus

5. Most of the benefits to agricultural support schemes such as the European Common Agricultural Policy go to

   1.   ?    Consumers
   2.   ?    Producers
   3.   ?    The Government
   4.   ?    Everyone gains equally from price supports