Appendix to Chapter 3
Consumer Surplus, Producer Surplus, and Market Efficiency
1. If Bill is willing to pay $10 for one good X, $8 for a second, and $6 for a third, and
the market price is a $5, then Bills consumer surplus is
Market Supply and Demand
1. If the demand curve for good X is downward-sloping, an increase in the price will
a. an increase in the demand for good X.
b. a decrease in the demand for good X.
c. no change in the quantity d
Markets in Action
1. Suppose prices for new homes have risen, yet the number of new homes sold has also
risen. We can conclude that
a. the demand for new homes has risen.
b. the law of demand has been violated.
c. new firms have en