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price a buyer would pay for each unit.","correct":true,"explanation":"At each quantity, the demand curve’s vertical height gives the highest price consumers are willing to pay for that unit, representing their marginal willingness to pay."},{"text":"The width of the demand curve shows the maximum price a buyer would pay for each unit.","correct":false,"explanation":"Width represents a quantity measurement, not price. The correct answer is the height of the demand curve, because the vertical axis measures price and therefore willingness to pay."},{"text":"The steepness of the demand curve shows the maximum price a buyer would pay for each unit.","correct":false,"explanation":"Steepness shows how responsive quantity demanded is to price, rather than the price buyers would pay. The correct answer is the height of the demand curve at that quantity."},{"text":"The position of the supply curve shows the maximum price a buyer would pay for each unit.","correct":false,"explanation":"The supply curve shows sellers’ costs or willingness to accept, not buyers’ maximum prices. The correct answer is the height of the demand curve for each unit."}]},{"id":"79492480-57f6-4800-9e41-9568011318a0","cardType":"basic","points":1,"front":"Where are price and quantity shown on a consumer-surplus diagram?","back":"Price is on the vertical axis; quantity is on the horizontal axis.","mcqOptions":[{"text":"Price is on the vertical axis; quantity is on the horizontal axis.","correct":true,"explanation":"Price is the dependent variable plotted vertically, while quantity is plotted horizontally. This convention allows each price and quantity combination to be identified on the diagram."},{"text":"Price is on the horizontal axis; quantity is on the vertical axis.","correct":false,"explanation":"This reverses the conventional axes used in demand and supply diagrams. The correct answer places price on the vertical axis and quantity on the horizontal axis."},{"text":"Price and quantity are both on the vertical axis.","correct":false,"explanation":"A graph needs separate axes to display the relationship between the two variables. The correct answer places price vertically and quantity horizontally."},{"text":"Price and quantity are both on the horizontal axis.","correct":false,"explanation":"Putting both variables on one axis prevents their relationship from being shown correctly. The correct answer places price on the vertical axis and quantity on the horizontal axis."}]},{"id":"a0020aa6-0222-476a-9e99-76e377b16212","cardType":"basic","points":1,"front":"Where is consumer surplus shown on a demand and supply diagram?","back":"Consumer surplus is the area below demand and above the market price.","mcqOptions":[{"text":"Consumer surplus is the area below demand and above the market price.","correct":true,"explanation":"Consumer surplus measures the difference between willingness to pay and the actual price, so it is the area below the demand curve and above the market price."},{"text":"Consumer surplus is the area above demand and below the market price.","correct":false,"explanation":"This reverses the relevant region and places it outside the usual surplus area. The correct answer is the area below demand and above the market price."},{"text":"Consumer surplus is the area below supply and above the market price.","correct":false,"explanation":"The area below supply and above price relates to producer surplus only when the boundaries are interpreted appropriately. Consumer surplus is below demand and above the market price."},{"text":"Consumer surplus is the area above demand and below the supply curve.","correct":false,"explanation":"The space between demand and supply represents total surplus, not consumer surplus alone. The correct answer is the area below demand and above the market price."}]},{"id":"5cf828ae-2ca5-4763-9932-480437c49e04","cardType":"basic","points":1,"front":"What does the gap between the demand curve and market price represent for one unit?","back":"The gap between willingness to pay and price paid is the buyer's surplus on that unit.","mcqOptions":[{"text":"The gap between willingness to pay and price paid is the buyer's surplus on that unit.","correct":true,"explanation":"For one unit, consumer surplus equals the buyer’s maximum willingness to pay minus the price actually paid. The gap therefore measures the benefit retained by that buyer."},{"text":"The gap between willingness to pay and price paid is the seller's surplus on that unit.","correct":false,"explanation":"Seller surplus compares the price received with the seller’s minimum acceptable price. The correct answer is the buyer’s surplus, found by comparing willingness to pay with price paid."},{"text":"The gap between willingness to pay and price paid is the buyer's cost on that unit.","correct":false,"explanation":"Cost is the amount paid, whereas the gap measures the benefit above that payment. The correct answer is the buyer’s surplus on that unit."},{"text":"The gap between willingness to pay and price paid is the buyer's loss on that unit.","correct":false,"explanation":"A willingness to pay above the actual price creates a gain, not a loss. The correct answer is the buyer’s surplus on that unit."}]},{"id":"a71f0e57-9eaf-41ba-957d-c40abce7964a","cardType":"basic","points":2,"front":"How is total consumer surplus calculated from the surplus on individual units?","back":"Adding each unit's surplus gives total consumer surplus.","mcqOptions":[{"text":"Adding each unit's surplus gives total consumer surplus.","correct":true,"explanation":"Each unit contributes willingness to pay minus price paid. Summing these individual surpluses gives the total benefit consumers receive above their expenditure."},{"text":"Subtracting each unit's surplus gives total consumer surplus.","correct":false,"explanation":"Subtracting individual surpluses would omit or reverse parts of the total. The correct method is to add every unit’s surplus because total consumer surplus is their combined amount."},{"text":"Multiplying each unit's surplus gives total consumer surplus.","correct":false,"explanation":"Surpluses from separate units are combined through addition, not multiplication. The correct answer is obtained by adding each unit’s surplus to find the total."},{"text":"Averaging each unit's surplus gives total consumer surplus.","correct":false,"explanation":"An average gives surplus per unit and is usually smaller than the total. The correct answer comes from adding all individual unit surpluses together."}]},{"id":"5ff005a6-3af9-49f6-bf58-85857dcfbfcd","cardType":"basic","points":1,"front":"A gig ticket is worth £80 to a buyer but costs £45. What is their consumer surplus?","back":"The buyer's consumer surplus is £35 because £80 − £45 = £35.","mcqOptions":[{"text":"The buyer's consumer surplus is £35 because £80 − £45 = £35.","correct":true,"explanation":"Consumer surplus equals willingness to pay minus the price paid. Subtracting £45 from £80 gives £35, which is the buyer’s net benefit from purchasing the ticket."},{"text":"The buyer's consumer surplus is £25 because £80 − £45 = £25.","correct":false,"explanation":"The subtraction is miscalculated by £10. The correct consumer surplus is £35 because the buyer’s £80 valuation exceeds the £45 price by £35."},{"text":"The buyer's consumer surplus is £125 because £80 − £45 = £125.","correct":false,"explanation":"Adding the valuation and price instead of subtracting them produces £125. The correct answer is £35, found by calculating £80 minus £45."},{"text":"The buyer's consumer surplus is £45 because £80 − £45 = £45.","correct":false,"explanation":"This treats the price paid as the surplus and overlooks the difference between valuation and expenditure. The correct answer is £35 from £80 − £45."}]},{"id":"ada6d297-6e89-4225-9bf0-e428438ee83a","cardType":"basic","points":2,"front":"Why does a fall in price increase consumer surplus?","back":"A lower price makes consumer surplus larger because existing buyers keep more value and extra buyers enter.","mcqOptions":[{"text":"A lower price makes consumer surplus larger because existing buyers keep more value and extra buyers enter.","correct":true,"explanation":"A price fall increases the difference between willingness to pay and price for existing buyers. It can also make purchases worthwhile for additional consumers, expanding total consumer surplus."},{"text":"A lower price makes consumer surplus smaller because existing buyers pay less and extra buyers enter.","correct":false,"explanation":"Paying less increases, rather than reduces, the surplus existing buyers receive, while new buyers may add further surplus. The correct answer is that consumer surplus becomes larger."},{"text":"A lower price makes consumer surplus unchanged because existing buyers keep the same value and extra buyers enter.","correct":false,"explanation":"Existing buyers’ willingness to pay does not fall with price, so paying less increases their surplus. The correct answer is that lower prices make consumer surplus larger."},{"text":"A lower price makes consumer surplus larger because existing buyers lose value and extra buyers leave.","correct":false,"explanation":"The direction of the effects on buyers is reversed: existing buyers gain value and lower prices attract extra buyers. The correct answer explains both effects accurately."}]},{"id":"c2c95726-1fa6-4a03-a4fe-81a9b5c4316b","cardType":"basic","points":2,"front":"Why does a rise in price reduce consumer surplus?","back":"A higher price makes consumer surplus smaller because some surplus transfers to producers and marginal buyers leave.","mcqOptions":[{"text":"A higher price makes consumer surplus smaller because some surplus transfers to producers and marginal buyers leave.","correct":true,"explanation":"A price rise reduces the surplus earned on each purchase and may prevent marginal consumers from buying. Part of the lost consumer surplus becomes producer surplus."},{"text":"A higher price makes consumer surplus larger because some surplus transfers to producers and marginal buyers leave.","correct":false,"explanation":"A higher price lowers the gap between willingness to pay and price, so consumer surplus cannot become larger. The correct answer is that it becomes smaller."},{"text":"A higher price makes consumer surplus smaller because all surplus transfers to producers and marginal buyers leave.","correct":false,"explanation":"Only some consumer surplus transfers to producers; other surplus is lost when marginal buyers stop purchasing. The correct answer says it becomes smaller because both effects reduce it."},{"text":"A higher price makes consumer surplus smaller because some surplus transfers to producers and marginal buyers enter.","correct":false,"explanation":"A higher price discourages marginal buyers rather than attracting them. The correct answer identifies both the transfer to producers and the exit of marginal buyers."}]},{"id":"56b711d8-6f16-4daa-8797-4eb0ae8f5921","cardType":"basic","points":1,"front":"What happens to quantity demanded at the choke price?","back":"The choke price is the demand-curve price at which quantity demanded falls to zero.","mcqOptions":[{"text":"The choke price is the demand-curve price at which quantity demanded falls to zero.","correct":true,"explanation":"At the choke price, the price is high enough that consumers demand none of the product, so quantity demanded is zero."},{"text":"The choke price is the demand-curve price at which quantity demanded reaches its maximum.","correct":false,"explanation":"The maximum quantity demanded occurs at the lowest relevant price, not the choke price. At the choke price, quantity demanded falls to zero because the price is too high."},{"text":"The choke price is the demand-curve price at which quantity supplied falls to zero.","correct":false,"explanation":"This confuses demand with supply. The choke price is identified on the demand curve and is where consumers demand zero units because the price is prohibitively high."},{"text":"The choke price is the demand-curve price at which quantity demanded equals quantity supplied.","correct":false,"explanation":"Equality between quantity demanded and supplied identifies market equilibrium, not the choke price. At the choke price, quantity demanded is zero."}]},{"id":"68e7ec4a-1441-4e29-a953-5b8833155547","cardType":"basic","points":1,"front":"What geometric shape represents consumer surplus with linear demand?","back":"With a straight-line demand curve, consumer surplus forms a triangle.","mcqOptions":[{"text":"With a straight-line demand curve, consumer surplus forms a triangle.","correct":true,"explanation":"Consumer surplus lies below the demand curve and above the market price. With a straight-line demand curve, these boundaries create a triangular area."},{"text":"With a straight-line demand curve, consumer surplus forms a rectangle.","correct":false,"explanation":"A rectangle would imply the willingness to pay is constant across quantities. A straight-line demand curve slopes downward, so the consumer-surplus area is triangular."},{"text":"With a straight-line demand curve, consumer surplus forms a circle.","correct":false,"explanation":"A circle does not result from the straight demand curve, horizontal price line, and vertical quantity axis. Those boundaries enclose a triangle."},{"text":"With a straight-line demand curve, consumer surplus forms a trapezium.","correct":false,"explanation":"A trapezium would require two parallel nonzero-width horizontal boundaries. Consumer surplus with a linear demand curve reaches the price-axis intercept and therefore forms a triangle."}]},{"id":"9b6484e9-3f97-420d-89cd-d72b12a1a56d","cardType":"basic","points":1,"front":"How is the height of the consumer-surplus triangle calculated?","back":"The triangle's height is choke price − market price.","mcqOptions":[{"text":"The triangle's height is choke price − market price.","correct":true,"explanation":"The vertical distance measures the difference between the highest price consumers would pay and the price actually paid, giving choke price minus market price."},{"text":"The triangle's height is market price − choke price.","correct":false,"explanation":"This reverses the subtraction and would produce a negative height. The vertical distance is the higher choke price minus the lower market price."},{"text":"The triangle's height is choke price + market price.","correct":false,"explanation":"Adding the two prices does not measure the vertical gap between them. Height is found by subtracting the market price from the choke price."},{"text":"The triangle's height is quantity bought − market price.","correct":false,"explanation":"This combines different variables and cannot represent a vertical price distance. The height uses the two relevant prices: choke price minus market price."}]},{"id":"6f687808-6f8e-4920-905e-2ddd1faa11fb","cardType":"basic","points":1,"front":"What does the base of the consumer-surplus triangle represent?","back":"The triangle's base is the quantity actually bought.","mcqOptions":[{"text":"The triangle's base is the quantity actually bought.","correct":true,"explanation":"The base extends horizontally from zero to the quantity purchased at the market price, so its length is the quantity actually bought."},{"text":"The triangle's base is the quantity consumers would buy at the choke price.","correct":false,"explanation":"At the choke price, quantity demanded is zero, so this cannot provide the triangle's horizontal base. The base is the quantity actually bought."},{"text":"The triangle's base is the quantity supplied at the market price.","correct":false,"explanation":"Consumer surplus is measured using demand and the quantity traded. In equilibrium this may equal quantity supplied, but the specific base represents quantity actually bought."},{"text":"The triangle's base is the choke price minus market price.","correct":false,"explanation":"This price difference measures the triangle's vertical height, not its horizontal base. The base represents the quantity actually bought."}]},{"id":"05acc2a1-a55f-4d26-864a-c24dafa2bdd5","cardType":"basic","points":2,"front":"How is consumer surplus calculated for a linear demand curve?","back":"$$$CS = \\frac{1}{2} \\times Q \\times (P_{\\text{choke}} - P)$$","mcqOptions":[{"text":"$$$CS = \\frac{1}{2} \\times Q \\times (P_{\\text{choke}} - P)$$","correct":true,"explanation":"Consumer surplus is the area of the triangle: one-half multiplied by its base, quantity bought, and its height, choke price minus market price."},{"text":"$$$CS = Q \\times (P_{\\text{choke}} - P)$$","correct":false,"explanation":"This calculates the rectangle formed by the quantity and price difference, omitting the one-half required for a triangular area. The correct formula includes one-half."},{"text":"$$$CS = \\frac{1}{2} \\times P \\times (P_{\\text{choke}} - Q)$$","correct":false,"explanation":"This uses price as the base and subtracts quantity from price, mixing incompatible variables. The correct area uses quantity as the base and the two-price difference as height."},{"text":"$$$CS = \\frac{1}{2} \\times Q \\times (P - P_{\\text{choke}})$$","correct":false,"explanation":"The prices are reversed, making the height negative because the choke price exceeds the market price. The correct formula uses choke price minus market price."}]},{"id":"857ca424-ec26-4d55-bf73-e12f6ad31ed0","cardType":"basic","points":2,"front":"Tickets sell at £30, the choke price is £90, and 50,000 are sold. Calculate consumer surplus.","back":"$$$CS = \\frac{1}{2} \\times 50{,}000 \\times (90 - 30) = £1{,}500{,}000$$","mcqOptions":[{"text":"$$$CS = \\frac{1}{2} \\times 50{,}000 \\times (90 - 30) = £1{,}500{,}000$$","correct":true,"explanation":"Consumer surplus is the triangular area: one-half times 50,000 tickets times the £60 difference between the choke price and ticket price, giving £1,500,000."},{"text":"$$$CS = 50{,}000 \\times (90 - 30) = £3{,}000{,}000$$","correct":false,"explanation":"This calculates a rectangle and forgets the one-half needed for the triangular area. Including one-half gives the correct consumer surplus of £1,500,000."},{"text":"$$$CS = \\frac{1}{2} \\times 50{,}000 \\times (90 + 30) = £3{,}000{,}000$$","correct":false,"explanation":"Adding the prices instead of finding their difference exaggerates the triangle's height. The relevant difference is £90 − £30, producing £1,500,000."},{"text":"$$$CS = \\frac{1}{2} \\times 50{,}000 \\times (30 - 90) = -£1{,}500{,}000$$","correct":false,"explanation":"Reversing the prices makes the height negative, even though the choke price is higher. Using £90 − £30 gives a positive £1,500,000 surplus."}]},{"id":"f4a0b85d-e7e6-4a7a-8ef5-65a504b3526f","cardType":"cloze","points":null,"front":"Consumer surplus measures the extra [ ] buyers receive above the price they pay.","back":"Consumer surplus measures the extra value buyers receive above the price they pay.","mcqOptions":[{"text":"value","correct":true,"explanation":"Consumer surplus is the additional value buyers place on a product above the amount they actually pay, summed across the units purchased."},{"text":"cost","correct":false,"explanation":"Cost refers to the resources or money required to provide a product, not buyers’ willingness to pay above the price. The correct term is value."},{"text":"profit","correct":false,"explanation":"Profit is revenue minus costs, usually considered from the seller’s perspective. Consumer surplus instead measures buyers’ extra value above the price paid."},{"text":"utility","correct":false,"explanation":"Utility is the broader satisfaction gained from consumption, whereas this definition specifically concerns the extra value above the purchase price. The correct term is value."}]},{"id":"c88464ee-b27e-40e2-9458-22425de176db","cardType":"cloze","points":null,"front":"A rightward demand shift raises willingness to pay at each quantity and tends to make consumer surplus [ ], other things equal.","back":"A rightward demand shift raises willingness to pay at each quantity and tends to make consumer surplus larger, other things equal.","mcqOptions":[{"text":"larger","correct":true,"explanation":"A rightward demand shift indicates greater willingness to pay at each quantity, increasing the area between demand and price and therefore consumer surplus."},{"text":"smaller","correct":false,"explanation":"A rightward shift raises willingness to pay rather than reducing it. With other conditions unchanged, the increased gap above price makes consumer surplus larger."},{"text":"unchanged","correct":false,"explanation":"The demand shift changes willingness to pay at each quantity, so the area representing consumer surplus changes. A rightward shift generally makes that area larger."},{"text":"negative","correct":false,"explanation":"Consumer surplus is not made negative by a rightward demand shift. Greater willingness to pay increases the benefit above the unchanged price, making consumer surplus larger."}]},{"id":"4823784f-a290-466e-9e4c-69ff8c0c6ef0","cardType":"cloze","points":null,"front":"Consumer surplus provides a measure of consumer welfare in [ ].","back":"Consumer surplus provides a measure of consumer welfare in pounds (£).","mcqOptions":[{"text":"pounds (£)","correct":true,"explanation":"Consumer surplus is measured as the monetary benefit consumers receive from paying less than their maximum willingness to pay, so pounds (£) provide the appropriate unit."},{"text":"dollars ($)","correct":false,"explanation":"Dollars ($) are a possible currency but do not match the currency used here. Consumer surplus is measured in monetary units, specifically pounds (£) in this context."},{"text":"euros (€)","correct":false,"explanation":"Euros (€) could measure consumer surplus in a euro-priced market, but they are not the currency specified here. The correct measurement is in pounds (£)."},{"text":"percentage (%)","correct":false,"explanation":"A percentage expresses a proportion rather than a monetary benefit. Consumer surplus measures the difference between willingness to pay and actual price in pounds (£)."}]},{"id":"181d7209-7985-4dd9-81d3-713a73c2de85","cardType":"cloze","points":null,"front":"[ ] equals consumer surplus plus producer surplus.","back":"Community surplus equals consumer surplus plus producer surplus.","mcqOptions":[{"text":"Community surplus","correct":true,"explanation":"Community surplus combines consumer surplus and producer surplus, showing the total net benefit received by consumers and producers in a market."},{"text":"Consumer surplus","correct":false,"explanation":"Consumer surplus measures only the benefit received by consumers, not the combined benefit of consumers and producers. Their combined surplus is called community surplus."},{"text":"Producer surplus","correct":false,"explanation":"Producer surplus measures only the benefit received by producers above their minimum acceptable price. Adding it to consumer surplus gives community surplus."},{"text":"Deadweight loss","correct":false,"explanation":"Deadweight loss is the surplus lost because output is below or above the efficient level. Consumer surplus plus producer surplus instead gives community surplus."}]},{"id":"3565cfcb-c334-497f-91d6-21484f229420","cardType":"cloze","points":null,"front":"Willingness to pay reflects both [ ] and need.","back":"Willingness to pay reflects both ability to pay and need.","mcqOptions":[{"text":"ability to pay","correct":true,"explanation":"Willingness to pay depends on both a person's ability to afford the good and their need for it, so it reflects ability to pay as well as need."},{"text":"willingness to pay","correct":false,"explanation":"Willingness to pay is the concept being explained, not a separate factor that determines itself. The relevant factor alongside need is ability to pay."},{"text":"income","correct":false,"explanation":"Income can influence affordability, but it is not identical to the broader factor described here. Willingness to pay reflects ability to pay and need."},{"text":"production cost","correct":false,"explanation":"Production cost concerns the seller's expense of supplying a good, not the buyer's purchasing capacity. Willingness to pay reflects ability to pay and need."}]},{"id":"8c489112-bc24-4a98-b0b7-851b9c26abe1","cardType":"cloze","points":null,"front":"Consumer surplus may understate poorer consumers' welfare because they cannot afford to signal their true [ ] for a good.","back":"Consumer surplus may understate poorer consumers' welfare because they cannot afford to signal their true value for a good.","mcqOptions":[{"text":"value","correct":true,"explanation":"Consumer surplus is based on the difference between a consumer's true value for a good and its market price. Poorer consumers may be unable to reveal that value through purchases."},{"text":"price","correct":false,"explanation":"Price is the amount charged for the good and is observed directly in the market. The concern is that poorer consumers cannot signal their true value for it."},{"text":"cost","correct":false,"explanation":"Cost refers to resources used by the consumer or producer, whereas consumer surplus concerns the buyer's valuation. The relevant unexpressed measure is true value."},{"text":"demand","correct":false,"explanation":"Demand describes the quantity consumers are willing and able to buy at different prices, not the underlying valuation of one good. The relevant term is value."}]}]}],"examCountdown":null,"heading":"2.5.1 meaning and significance of consumer surplus","title":"2.5.1 meaning and significance of consumer surplus Flashcards","topbar":{"backHref":"/international-a-level/economics/cie/flashcards"},"topicSidebar":"$L38"}]}],"topicId":"458aa564-51fa-492f-80a9-3b40fec7cd96","walled":"$L39"}],"$L3a","$L3b"]