CHAPTER 14: Consumer’s Surplus
MULTIPLE CHOICE
1. In Problem 1, Sir Plus has a demand function for mead that is given by the equation D(p) = 100 − p. If
the price of mead is $85, how much is Sir Plus’s net consumer’s surplus?
a.
112.50
b.
15
c.
225
d.
56.25
e.
7,650
2. In Problem 1, Sir Plus has a demand function for mead that is given by the equation D(p) = 100 − p. If
the price of mead is $85, how much is Sir Plus’s net consumer’s surplus?
a.
15
b.
225
c.
56.25
d.
112.50
e.
7,650
3. In Problem 1, Sir Plus has a demand function for mead that is given by the equation D(p) = 100 − p. If
the price of mead is $95, how much is Sir Plus’s net consumer’s surplus?
a.
12.50
b.
6.25
c.
25
d.
5
e.
9,500
4. In Problem 1, Sir Plus has a demand function for mead that is given by the equation D(p) = 100 − p. If
the price of mead is $85, how much is Sir Plus’s net consumer’s surplus?
a.
15
b.
112.50
c.
56.25
d.
225
e.
7,650
5. In Problem 1, Sir Plus has a demand function for mead that is given by the equation D(p) = 100 − p. If
the price of mead is $95, how much is Sir Plus’s net consumer’s surplus?
a.
25
b.
6.25
c.
5
d.
12.50
e.
9,500
6. Ms. Quasimodo in Problem 3 has the utility function U(x, m) = 100x − x2/2 + m, where x is her
consumption of earplugs and m is money left over to spend on other stuff. If she has $10,000 to spend
on earplugs and other stuff and if the price of earplugs rises from $50 to $85, then her net consumer’s
surplus
a.
falls by 1,137.50.
b.
falls by 3,137.50.
c.
falls by 525.
d.
increases by 568.75.
e.
increases by 2,275.
7. Ms. Quasimodo in Problem 3 has the utility function U(x, m) = 100x − x2/2 + m, where x is her
consumption of earplugs and m is money left over to spend on other stuff. If she has $10,000 to spend
on earplugs and other stuff and if the price of earplugs rises from $50 to $65, then her net consumer’s
surplus
a.
falls by 2,637.50.
b.
falls by 525.
c.
falls by 637.50.
d.
increases by 318.75.
e.
increases by 1,275.
8. Ms. Quasimodo in Problem 3 has the utility function U(x, m) = 100x − x2/2 + m, where x is her
consumption of earplugs and m is money left over to spend on other stuff. If she has $10,000 to spend
on earplugs and other stuff and if the price of earplugs rises from $50 to $70, then her net consumer’s
surplus
a.
increases by 400.
b.
falls by 2,800.
c.
falls by 600.
d.
falls by 800.
e.
increases by 1,600.
9. Ms. Quasimodo in Problem 3 has the utility function U(x, m) = 100x − x2/2 + m, where x is her
consumption of earplugs and m is money left over to spend on other stuff. If she has $10,000 to spend
on earplugs and other stuff and if the price of earplugs rises from $50 to $75, then her net consumer’s
surplus
a.
falls by 937.50.
b.
falls by 625.
c.
falls by 2,937.50.
d.
increases by 468.75.
e.
increases by 1,875.
10. Ms. Quasimodo in Problem 3 has the utility function U(x, m) = 100x − x2/2 + m, where x is her
consumption of earplugs and m is money left over to spend on other stuff. If she has $10,000 to spend
on earplugs and other stuff and if the price of earplugs rises from $50 to $70, then her net consumer’s
surplus
a.
falls by 800.
b.
increases by 400.
c.
falls by 600.
d.
falls by 2,800.
e.
increases by 1,600.
11. Bernice in Problem 5 has the utility function u(x, y) = min x, y, where x is the number of pairs of
earrings she buys per week and y is the number of dollars per week she has left to spend on other
things. (We allow the possibility that she buys fractional numbers of pairs of earrings per week.) If she
originally had an income of $17 per week and was paying a price of $3 per pair of earrings, then if the
price of earrings rose to $7, the compensating variation of that price change (measured in dollars per
week) would be closest to
a.
$8.50.
b.
$17.
c.
$35.
d.
$34.
e.
$33.
12. Bernice in Problem 5 has the utility function u(x, y) = minx, y, where x is the number of pairs of
earrings she buys per week and y is the number of dollars per week she has left to spend on other
things. (We allow the possibility that she buys fractional numbers of pairs of earrings per week.) If she
originally had an income of $20 per week and was paying a price of $2 per pair of earrings, then if the
price of earrings rose to $5, the compensating variation of that price change (measured in dollars per
week) would be closest to
a.
$20.
b.
$41.
c.
$40.
d.
$10.
e.
$39.
13. Bernice in Problem 5 has the utility function u(x, y) = minx, y, where x is the number of pairs of
earrings she buys per week and y is the number of dollars per week she has left to spend on other
things. (We allow the possibility that she buys fractional numbers of pairs of earrings per week.) If she
originally had an income of $18 per week and was paying a price of $8 per pair of earrings, then if the
price of earrings rose to $14, the compensating variation of that price change (measured in dollars per
week) would be closest to
a.
$12.
b.
$25.
c.
$7.20.
d.
$24.
e.
$23.
14. Bernice in Problem 5 has the utility function u(x, y) = minx, y, where x is the number of pairs of
earrings she buys per week and y is the number of dollars per week she has left to spend on other
things. (We allow the possibility that she buys fractional numbers of pairs of earrings per week.) If she
originally had an income of $11 per week and was paying a price of $4 per pair of earrings, then if the
price of earrings rose to $8, the compensating variation of that price change (measured in dollars per
week) would be closest to
a.
$4.89.
b.
$17.60.
c.
$18.60.
d.
$8.80.
e.
$16.60.
15. Bernice in Problem 5 has the utility function u(x, y) = minx, y, where x is the number of pairs of
earrings she buys per week and y is the number of dollars per week she has left to spend on other
things. (We allow the possibility that she buys fractional numbers of pairs of earrings per week.) If she
originally had an income of $19 per week and was paying a price of $8 per pair of earrings, then if the
price of earrings rose to $10, the compensating variation of that price change (measured in dollars per
week) would be closest to
a.
$4.22.
b.
$9.44.
c.
$3.45.
d.
$8.44.
e.
$7.44.
16. If Bernice (whose utility function is minx, y, where x is her consumption of earrings and y is money
left for other stuff) had an income of $13 and was paying a price of $2 for earrings when the price of
earrings went up to $3, then the equivalent variation of the price change was
a.
$3.25.
b.
$4.33.
c.
$8.67.
d.
$1.63.
e.
$3.79.
17. If Bernice (whose utility function is minx, y, where x is her consumption of earrings and y is money
left for other stuff) had an income of $16 and was paying a price of $8 for earrings when the price of
earrings went up to $10, then the equivalent variation of the price change was
a.
$3.56.
b.
$1.45.
c.
$2.91.
d.
$7.11.
e.
$3.23.
18. If Bernice (whose utility function is minx, y, where x is her consumption of earrings and y is money
left for other stuff) had an income of $19 and was paying a price of $5 for earrings when the price of
earrings went up to $11, then the equivalent variation of the price change was
a.
$19.
b.
$38.
c.
$9.50.
d.
$4.75.
e.
$14.25.
19. If Bernice (whose utility function is minx, y, where x is her consumption of earrings and y is money
left for other stuff) had an income of $10 and was paying a price of $3 for earrings when the price of
earrings went up to $4, then the equivalent variation of the price change was
a.
$2.
b.
$2.50.
c.
$5.
d.
$1.
e.
$2.25.
20. If Bernice (whose utility function is minx, y, where x is her consumption of earrings and y is money
left for other stuff) had an income of $20 and was paying a price of $1 for earrings when the price of
earrings went up to $6, then the equivalent variation of the price change was
a.
$50.
b.
$14.29.
c.
$7.14.
d.
$100.
e.
$32.14.
21. In Problem 7, Lolita’s utility function is U(x, y) = x − x2/2 + y, where x is her consumption of cow feed
and y is her consumption of hay. If the price of cow feed is $.30, the price of hay is $1, and her income
is $2 and if Lolita chooses the combination of hay and cow feed that she likes best from among those
combinations she can afford, her utility will be
a.
2.24.
b.
1.70.
c.
0.24.
d.
3.24.
e.
1.24.
22. In Problem 7, Lolita’s utility function is U(x, y) = x − x2/2 + y, where x is her consumption of cow feed
and y is her consumption of hay. If the price of cow feed is $.10, the price of hay is $1, and her income
is $2 and if Lolita chooses the combination of hay and cow feed that she likes best from among those
combinations she can afford, her utility will be
a.
2.40.
b.
3.40.
c.
0.40.
d.
1.90.
e.
1.40.
23. In Problem 7, Lolita’s utility function is U(x, y) = x − x2/2 + y, where x is her consumption of cow feed
and y is her consumption of hay. If the price of cow feed is $.10, the price of hay is $1, and her income
is $2 and if Lolita chooses the combination of hay and cow feed that she likes best from among those
combinations she can afford, her utility will be
a.
0.40.
b.
3.40.
c.
2.40.
d.
1.90.
e.
1.40.
24. In Problem 7, Lolita’s utility function is U(x, y) = x − x2/2 + y, where x is her consumption of cow feed
and y is her consumption of hay. If the price of cow feed is $.60, the price of hay is $1, and her income
is $4 and if Lolita chooses the combination of hay and cow feed that she likes best from among those
combinations she can afford, her utility will be
a.
4.08.
b.
3.40.
c.
0.08.
d.
6.08.
e.
2.08.
25. In Problem 7, Lolita’s utility function is U(x, y) = x − x2/2 + y, where x is her consumption of cow feed
and y is her consumption of hay. If the price of cow feed is $.10, the price of hay is $1, and her income
is $2 and if Lolita chooses the combination of hay and cow feed that she likes best from among those
combinations she can afford, her utility will be
a.
0.40.
b.
3.40.
c.
1.90.
d.
2.40.
e.
1.40.
26. Cindy’s utility function for BMWs and money is given by 19,000x + y, where x is the number of
BMWs she has and y is the amount of money she has. Her income is $24,000. Her reservation price for
one BMW is
a.
$19,000.
b.
$19,000 − y.
c.
$5,000.
d.
$19,000 − p.
e.
$43,000.
27. Desiree’s utility function for BMWs and money is given by 9,000x + y, where x is the number of
BMWs she has and y is the amount of money she has. Her income is $22,000. Her reservation price for
one BMW is
a.
$9,000 − p.
b.
$9,000.
c.
$13,000.
d.
$9,000 − y.
e.
$31,000.
28. Betsy’s utility function for BMWs and money is given by 24,000x + y, where x is the number of
BMWs she has and y is the amount of money she has. Her income is $32,000. Her reservation price for
one BMW is
a.
$24,000.
b.
$24,000 − p.
c.
$24,000 − y.
d.
$8,000.
e.
$56,000.
29. Betsy’s utility function for BMWs and money is given by 8,000x + y, where x is the number of BMWs
she has and y is the amount of money she has. Her income is $22,000. Her reservation price for one
BMW is
a.
$14,000.
b.
$8,000 − y.
c.
$8,000 − p.
d.
$8,000.
e.
$30,000.
30. Kitty’s utility function for BMWs and money is given by 16,000x + y, where x is the number of
BMWs she has and y is the amount of money she has. Her income is $23,000. Her reservation price for
one BMW is
a.
$16,000 − y.
b.
$16,000 − p.
c.
$16,000.
d.
$7,000.
e.
$39,000.