Consumer and producer surplus — Paper 1 · A Level Economics 9708

12 The diagram shows a demand curve for journeys on a toll road. toll per journey ($) 5 3 0 number of journeys 1000 2000 per day If there is a reduction in the toll from $5 to $3, what is the resulting increase in the daily consumer surplus? A $1000 B $2000 C $3000 D $4000

1 marks

Answer: C

This question in 9708/11 Oct/Nov 2005

12 In the diagram, S1 is the original supply curve and D is the original demand curve. W S2 S1 V T price R P Q D O M N quantity If supply shifts to S2, which area represents the change in consumer surplus? A PQVT B PQW C PRVT D TVW

1 marks

Answer: A

This question in 9708/11 May/June 2006

12 The diagram represents a market for a good, in which the equilibrium price is OU. W supply X Z maximum V price price Y U demand O quantity A maximum price of OV is imposed by law. What effect does this have on consumer surplus? A It decreases by area VXYU. B It increases by area WXV. C It increases by area XYZ. D It is not affected.

1 marks

Answer: D

This question in 9708/11 May/June 2007

11 The number of passenger journeys per week by train on a certain route is shown by the demand curve in the diagram. V P fare T W U demand O R S number of journeys / week Initially the fare is OP, but it is then reduced by PW. Which area measures the amount spent on the extra journeys resulting from the lower fare? A VUT B PWTV C VRST D URST

1 marks

Answer: D

This question in 9708/11 Oct/Nov 2007

7 The diagram shows the demand curve for a product. M N price S Q R D O L P quantity If the rectangle OLMN is equal in area to the rectangle OPQR, which statement is correct? A A rise in price from OR to ON results in the same proportionate fall in quantity demanded. B Consumer surplus falls by RSMN if the price rises from OR to ON. C The price elasticity of demand is unitary for all changes in price. D Total revenue falls by MSQ if the price rises from OR to ON.

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2008

12 The diagram shows the demand and supply curves for a product. X S price Y W V D O Z quantity Which area measures the total amount consumers would be willing to pay for the equilibrium level of output? A OWYZ B OXYZ C OVYZ D XYV

1 marks

Answer: B

This question in 9708/11 Oct/Nov 2008

10 The table shows the maximum price a consumer would be willing to pay for successive cans of fruit juice. cans first second third fourth fifth price ($) 14 10 6 4 3 The price of a can of fruit juice is $4 and, having bought three cans, the consumer decides to buy a fourth. How does buying the fourth can affect his consumer surplus? A It leaves it unchanged. B It lowers it by $2. C It raises it by $4. D It raises it by $34.

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2009

9 The table shows the maximum price a consumer would be willing to pay for successive cans of fruit juice. cans first second third fourth fifth price ($) 14 10 6 4 3 The price of a can of fruit juice is $4 and, having bought three cans, the consumer decides to buy a fourth. How does buying the fourth can affect his consumer surplus? A It leaves it unchanged. B It lowers it by $2. C It raises it by $4. D It raises it by $34.

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2009

12 The diagram shows a demand curve for journeys on a toll road. toll per journey ($) 5 3 demand 0 1000 2000 number of journeys per day If there is a reduction in the toll from $5 to $3, what is the resulting increase in the daily consumer surplus? A $1000 B $2000 C $3000 D $4000

1 marks

Answer: C

This question in 9708/11 May/June 2010

18 The diagram shows the demand and supply curves of a good. S price J D O quantity The government sets a maximum price of OJ for the good. How will this affect the consumers and producers of the good? effect on consumers effect on producers A All consumers will gain. Producers will lose. B All consumers will gain. Producers will gain. C Some consumers will gain and some will lose. Producers will gain. D Some consumers will gain and some will lose. Producers will lose.

1 marks

Answer: D

This question in 9708/11 May/June 2010

11 The diagram shows a demand curve for journeys on a toll road. toll per journey ($) 5 3 demand 0 1000 2000 number of journeys per day If there is a reduction in the toll from $5 to $3, what is the resulting increase in the daily consumer surplus? A $1000 B $2000 C $3000 D $4000

1 marks

Answer: C

This question in 9708/12 May/June 2010

17 The diagram shows the demand and supply curves of a good. S price J D O quantity The government sets a maximum price of OJ for the good. How will this affect the consumers and producers of the good? effect on consumers effect on producers A All consumers will gain. Producers will lose. B All consumers will gain. Producers will gain. C Some consumers will gain and some will lose. Producers will gain. D Some consumers will gain and some will lose. Producers will lose.

1 marks

Answer: D

This question in 9708/12 May/June 2010

10 The diagram shows a demand curve for journeys on a toll road. toll per journey ($) 5 3 demand 0 1000 2000 number of journeys per day If there is a reduction in the toll from $5 to $3, what is the resulting increase in the daily consumer surplus? A $1000 B $2000 C $3000 D $4000

1 marks

Answer: C

This question in 9708/13 May/June 2010

11 Which area in the diagram represents the amount of consumer surplus that would occur in a market if a government enforced an effective maximum price? supply f g price h j i k maximum price demand O quantity A f only B f + g + h only C f + g + i only D f + g + h + i + j + k

1 marks

Answer: C

This question in 9708/11 Oct/Nov 2010

11 Which area in the diagram represents the amount of consumer surplus that would occur in a market if a government enforced an effective maximum price? supply f g price h j i k maximum price demand O quantity A f only B f + g + h only C f + g + i only D f + g + h + i + j + k

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2010

10 Which area in the diagram represents the amount of consumer surplus that would occur in a market if a government enforced an effective maximum price? supply f g price h j i k maximum price demand O quantity A f only B f + g + h only C f + g + i only D f + g + h + i + j + k

1 marks

Answer: C

This question in 9708/13 Oct/Nov 2010

13 What is necessary for consumer surplus to be zero? A Demand is perfectly elastic. B Demand is perfectly inelastic. C Supply is perfectly elastic. D Supply is perfectly inelastic.

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2011

11 In the diagram, S1 is the original supply curve and D is the original demand curve. S2 W S1 V T price R P Q D O M N quantity If supply shifts to S2, which area represents the change in consumer surplus? A PQVT B PQW C PRVT D TVW

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2011

10 The diagram shows the effect on the market for rice of a change in government policy that causes a shift in the supply curve from S to S1. S S1 L price K J M D O quantity What does the area JKLM represent? A the additional saving to importers of the removal of a tariff on rice B the cost to the government of a subsidy to rice growers C the increase in consumer surplus from the introduction of a maximum price for rice D the loss in government revenue from the reduction in a lump sum tax on rice

1 marks

Answer: B

This question in 9708/13 Oct/Nov 2011

11 What is necessary for consumer surplus to be zero? A Demand is perfectly elastic. B Demand is perfectly inelastic. C Supply is perfectly elastic. D Supply is perfectly inelastic.

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2011

11 The diagram shows the effect of the imposition of a tax equal to FG on a commodity. S2 S1 price u x y v F w G D O quantity Which area represents the reduction in consumer surplus? A u + v B u + x C u + x + y D x + w

1 marks

Answer: C

This question in 9708/11 May/June 2012

12 The table shows the maximum amount three students would each be willing to pay for a taxi to take them home from a night club. $ Jane 10.00 Sara 8.00 Yasmin 6.00 Assume they share the taxi fare as shown in the table below. Which shows how much they each should pay so that they each obtain the same consumer surplus? Jane Sara Yasmin $ $ $ A 2.00 4.00 6.00 B 4.00 4.00 4.00 C 5.00 4.00 3.00 D 6.00 4.00 2.00

1 marks

Answer: D

This question in 9708/12 May/June 2012

11 The diagram shows the effect of the imposition of a tax equal to FG on a commodity. S2 S1 price u x y v F w G D O quantity Which area represents the reduction in consumer surplus? A u + v B u + x C u + x + y D x + w

1 marks

Answer: C

This question in 9708/13 May/June 2012

12 What must be the effect on consumer surplus if the supply of a product, that has a normal demand curve, halves? A Consumer surplus will fall. B Consumer surplus will fall by 50 %. C Consumer surplus will rise. D Consumer surplus will rise by 100 %.

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2012

20 An economy with a long history of extensive barriers to trade decides to switch to totally free trade. What is most likely to increase in the short term? A consumer surplus B government revenue C inflationary pressure D profits of all domestic companies

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2012

12 The diagram represents a market for a good, in which the equilibrium price is OU. W supply X Z maximum V price Y price U demand O quantity A maximum price of OV is imposed by the government. What effect does this have on consumer surplus? A It decreases by area VXYU. B It increases by area WXV. C It increases by area XYZ. D It is not affected.

1 marks

Answer: D

This question in 9708/13 Oct/Nov 2012

12 The diagram shows the demand and supply curves for a product. X S price Y W V D O Z quantity Which area measures the total amount consumers would be willing to pay for the equilibrium level of output? A OWYZ B OXYZ C OVYZ D XYV

1 marks

Answer: B

This question in 9708/11 May/June 2013

20 The diagram shows the effects of introducing an import tariff on wheat in a country. R domestic supply price of S wheat PT world supply + tariff T U world supply P domestic demand O Q1 Q2 quantity of wheat Which area represents the loss of consumer surplus from the tariff? A PTSR B PTSUP C STU D SUQ2Q1

1 marks

Answer: B

This question in 9708/11 May/June 2013

13 The diagram shows the change in the number of passengers when a company reduces the fare for a train journey from OP1 to OP2. v train P1 fare w y P2 x z O N1 N2 number of passengers Which areas measure the consumer surplus at the new fare for the original passengers and for the additional passengers? original additional passengers passengers A v y B v + w y C v + w + x y + z D x z

1 marks

Answer: B

This question in 9708/12 May/June 2013

13 The diagram shows a consumer’s demand curve for a product. 30 25 20 price ($) 15 10 5 D 0 5 10 15 quantity How does consumer surplus change as the price of the product falls by $5 increments between $20 and $5? A It increases at a constant rate (%) with each $5 fall. B It increases by a constant amount with each $5 fall. C It increases by a decreasing amount with each $5 fall. D It increases by an increasing amount with each $5 fall.

1 marks

Answer: D

This question in 9708/13 May/June 2013

12 The table shows the price Rashid is willing to pay for successive cans of cola. cans of cola 1st 2nd 3rd 4th price willing to pay $0.90 $0.80 $0.65 $0.50 If the price is $0.50 and Rashid buys four cans, what is the monetary value of Rashid’s consumer surplus? A $0.15 B $0.85 C $0.90 D $1.35

1 marks

Answer: B

This question in 9708/11 Oct/Nov 2013

5 The diagram shows an individual’s demand curve. D X price Y D O quantity What does XY measure? A the consumer surplus derived by the individual from the last unit consumed B the equilibrium price of the good C the quantity demanded by the individual at any given price D the value of the individual’s marginal benefit from the last unit consumed

1 marks

Answer: D

This question in 9708/12 Oct/Nov 2013

11 The diagram shows the market for sugar which is in equilibrium at a price of OP. S Q R price P P1 S U T D O L M N quantity A government then fixes a maximum price of OP1. What will happen as a result? A an increase in consumer surplus equal to PRUP1 B a reduction in expenditure by people who still buy sugar equal to PQSP1 C a reduction in farmers’ receipts equal to QRML D farmers’ receipts would be PQLO

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2013

12 A consumer needed a new camera and a new armchair. She was prepared to spend $500 on one item. She discovered that the camera cost $450 and the armchair $500. She bought the camera. What was her opportunity cost and her consumer surplus? opportunity consumer cost surplus A the armchair $50 B the armchair $500 C $50 $450 D $450 $50

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2013

12 A consumer saved $700 and preferred to spend the money on a new television rather than a new washing machine. When she went to the shop she discovered that the television cost $500 and the washing machine cost $400. She bought the television. What was the consumer surplus and the opportunity cost? consumer surplus opportunity cost A $100 $400 B $200 the washing machine C $200 $500 D $400 the washing machine

1 marks

Answer: B

This question in 9708/13 Oct/Nov 2013

19 The diagram shows that a country can make a product at less than the world price. domestic supply D R T P1 world price U V P price W S domestic demand O X Y Z quantity What will happen if it engages in international trade? A Domestic consumers will experience a fall in consumer surplus of RVT. B Domestic output of OY will be exported. C Domestic producers will gain an increase in revenue of PP1TV. D Revenue from exports will be XRTZ from the product.

1 marks

Answer: D

This question in 9708/11 May/June 2014

12 What is consumer surplus? A the difference between the cost of producing a good and what consumers would be willing to pay for it B the difference between what consumers actually pay for a good and its cost of production C the difference between what consumers actually pay for a good and the maximum amount they would be willing to pay for it D the difference between what consumers are willing to pay for a good and the amount required by producers to supply the good

1 marks

Answer: C

This question in 9708/12 May/June 2014

13 The difference between what consumers pay for a product and what they are prepared to pay is known as A a shortage. B consumer surplus. C excess demand. D opportunity cost.

1 marks

This question in 9708/11 Oct/Nov 2014

20 The diagram shows the effect of removing a tariff on imports of sugar into a country. domestic supply price of sugar T Y PT world supply + tariff U V W X P world supply domestic demand O Q1 Q2 Q3 Q4 quantity of sugar Which area represents the loss of producer surplus for domestic producers of sugar in the country? A PTTUP B PTTVP C PTYXP D TYWV

1 marks

This question in 9708/11 Oct/Nov 2014

12 The table shows the maximum price a consumer would be willing to pay for successive cans of fruit juice. cans first second third fourth fifth price ($) 14 10 6 4 3 The price of a can of fruit juice is $4 and, having bought three cans, the consumer decides to buy a fourth. How does buying the fourth can affect his consumer surplus? A It leaves it unchanged. B It lowers it by $2. C It raises it by $4. D It raises it by $34.

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2014

7 The price elasticity of demand for a product is inelastic. How will a decrease in supply affect producer revenue and consumer surplus? producer revenue consumer surplus A fall fall B fall rise C rise fall D rise rise

1 marks

Answer: C

This question in 9708/13 Oct/Nov 2014

12 The diagram shows a demand curve for journeys on a toll road. 5 toll per journey ($) 3 demand 0 1000 2000 number of journeys per day If there is a reduction in the toll from $5 to $3, what is the resulting increase in the daily consumer surplus? A $1000 B $2000 C $3000 D $4000

1 marks

Answer: C

This question in 9708/11 May/June 2015

20 In the diagram, D is a country’s demand curve for an imported good. The country’s government imposes an import tariff equal to PWPC on the good. PC price x y PW z D O quantity Which areas measure the resulting loss in consumer surplus and the resulting gain in government revenue? loss in gain in consumer government surplus revenue A x + y x B x + y z C y x D y z

1 marks

Answer: A

This question in 9708/11 May/June 2015

9 The diagram shows the effect on the market for rice of a change in government policy that causes a shift in the supply curve from S to S1. S S1 L price K J M D O quantity What does the area JKLM represent? A the cost to the government of a subsidy to rice growers B the extra saving to importers of the removal of a tariff on rice C the increase in consumer surplus from the introduction of a maximum price for rice D the loss in government revenue from the reduction in a lump sum tax on rice

1 marks

Answer: A

This question in 9708/12 May/June 2015

13 Producer surplus is the difference between A the consumer surplus from the good and the producers’ total cost in supplying the good. B the highest price that the consumer would be willing to pay for the good and the price the producer actually sold it for. C the lowest price that the producer would accept for the good and the price the producer actually sold it for. D the quantity that the producers manufacture in a week and the amount sold to consumers in that week.

1 marks

Answer: C

This question in 9708/12 May/June 2015

18 The diagram shows the effects of placing a unit tax equal to AB on a good. S2 S1 A price Z E G C F B D O X Y quantity Which area represents the burden of tax paid by the producer? A ECBF B EGBF C ZABF D ZAGE

1 marks

Answer: B

This question in 9708/12 May/June 2015

20 What will rise as a consequence of removing a tariff? A domestic consumer surplus B domestic price C domestic producer surplus D government revenue

1 marks

Answer: A

This question in 9708/13 May/June 2015

13 The diagram shows the European airline market. F S1 S2 M G price H N J K D O R T quantity New entrants have come into the market, shifting supply from S1 to S2. Which area represents the new producer surplus? A HNK B HNF C GMJ D KNTO

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2015

13 The diagram shows an individual’s demand curve for a commodity. price x P z y D O Q quantity The supplier of the commodity charges a unit price of OP but consumers are currently required to purchase a minimum quantity, OQ. Which area(s) in the diagram measure the net gain in consumer surplus from the removal of the minimum purchase requirement? A x + y B x – z C y only D z only

1 marks

Answer: D

This question in 9708/12 Oct/Nov 2015

12 The diagram shows a competitive market in equilibrium with price P and quantity Q. X S price P Y Z D O Q quantity Which area shows the consumer surplus and which area shows the producer surplus? consumer producer surplus surplus A OXYQ OZYQ B OXYQ PYZ C XYP OZYQ D XYP PYZ

1 marks

Answer: D

This question in 9708/13 Oct/Nov 2015

18 The diagram shows the demand and supply curves of a good. S J price D O quantity The government sets a minimum price of OJ for the good. How will this affect the producers and consumers of the good? effect on producers effect on consumers A all producers will gain consumers will lose B all producers will gain consumers will gain C some producers will gain and some will lose consumers will lose D some producers will gain and some will lose consumers will gain

1 marks

Answer: C

This question in 9708/13 Oct/Nov 2015

13 A company opened a garden to the public and charged for entry. The government then provided a grant to improve the garden on the condition that entry became free. What would result from the government’s action? A The consumer surplus would increase. B The demand curve would shift to the left. C The supply curve would be infinitely elastic. D There would be no equilibrium position as the garden is free.

1 marks

Answer: A

This question in 9708/12 Feb/March 2016

13 The table shows the price Rashid is willing to pay for successive cakes and their production cost. cakes 1st 2nd 3rd 4th price willing to pay $0.90 $0.80 $0.65 $0.50 production cost $0.20 $0.30 $0.40 $0.50 If the price is $0.50 and Rashid buys four cakes, what is the monetary value of the consumer surplus and the producer surplus? consumer producer surplus ($) surplus ($) A 0 0 B 0.15 0.10 C 0.85 0.60 D 2.85 1.40

1 marks

Answer: C

This question in 9708/11 May/June 2016

13 The diagram shows a consumer’s demand curve for a product. 30 25 20 price ($) 15 10 5 D 0 5 10 15 quantity How does consumer surplus change as the price of the product rises in $5 steps between $5 and $20? A It falls at a constant rate (%) with each $5 rise. B It falls by a constant amount with each $5 rise. C It falls by a decreasing amount with each $5 rise. D It falls by an increasing amount with each $5 rise.

1 marks

Answer: C

This question in 9708/12 May/June 2016

13 In the diagram, D is the demand curve for Indian tea exports and S1 is the initial supply curve. S1 S2 price x z w y D O quantity The Indian government removes the tax on tea exports, which causes the supply curve to shift to S2. Which areas in the diagram measure the resulting loss in tax revenue to the Indian government and the resulting gain in consumer surplus? loss in tax gain in revenue consumer surplus A x w + y B x y C x + y z D x + y z + x

1 marks

Answer: D

This question in 9708/13 May/June 2016

13 The diagram shows the market for computers in Pakistan. W S price Y X D O Z quantity What can be concluded about the value of consumer surplus? A It is less than producer revenue. B It is less than producer surplus. C It is more than producer revenue. D It is more than producer surplus.

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2016

13 A government imposes an indirect tax on a product with normal demand and supply curves. The tax raises $100 million. What effect will the tax have on the value of the combined consumer surplus and producer surplus? A It will be unaffected. B It will fall by less than $100 million. C It will fall by exactly $100 million. D It will fall by more than $100 million.

1 marks

Answer: D

This question in 9708/12 Oct/Nov 2016

15 The diagram shows the supply and demand curves of a commodity. A government subsidy causes the supply curve to shift from S1 to S2. Which area measures the difference between the cost to the economy of producing the resulting increase in output (Q1–Q2) and the value consumers place on this increase in output? D S1 S2 price A B C D O Q1 Q2 quantity

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2016

13 The diagram shows an increase in the demand for a good from D1 to D2. S V W P2 price P1 Y D2 D1 O quantity What effect does the change in demand have on producer surplus? A decrease by P1YWP2 B decrease by P2VYP1 C increase by P1YWP2 D increase by P2VYP1

1 marks

Answer: C

This question in 9708/13 Oct/Nov 2016

27 An economy with a long history of extensive barriers to trade decides to switch to totally free trade. What is most likely to increase in the short term? A consumer surplus B government revenue C inflationary pressure D profits of all domestic companies

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2016

13 A well-known clothes retailer decides to have a summer sale in its shops. As a result the number of people who use the shops increases. J original price K L sale price M N O customer purchases Which areas measure the change in consumer surplus for the customers who would have bought the clothes anyway and the surplus for the new customers? existing new customers customers A J + K L B J + K + M L + N C K L D M N

1 marks

Answer: C

This question in 9708/12 Feb/March 2017

13 The table shows the maximum amount three students would each be willing to pay for a taxi to take them home from a nightclub. $ Jane 10.00 Sara 8.00 Yasmin 6.00 Assume they share the taxi fare as shown in the table below. Which shows how much they each should pay so that they each obtain the same consumer surplus? Jane Sara Yasmin $ $ $ A 2.00 4.00 6.00 B 4.00 4.00 4.00 C 5.00 4.00 3.00 D 6.00 4.00 2.00

1 marks

Answer: D

This question in 9708/11 May/June 2017

13 The diagram shows the demand and supply curves for a good during a certain period. The market price is shown by P and the quantity traded by point M. supply price A X P B demand O M quantity Which area indicates producer surplus? A AXB B AXMO C AXP D PXB

1 marks

Answer: D

This question in 9708/12 May/June 2017

13 D1 and S1 represent the initial demand and supply curves for a product. D2 and S2 are the equivalent curves after changes in market conditions. S2 price of product P Q D2 R S S1 T U D1 V O quantity of product What are resulting changes in consumer and producer surplus? change in change in consumer surplus producer surplus A from R to P from U to Q B from R + T to P from U to Q + R C from R + T to P from V to Q D from R to P + S from V to Q + R

1 marks

Answer: B

This question in 9708/13 May/June 2017

13 The diagram shows the market for computers in Pakistan. W supply price Y X demand O Z quantity Which areas represent consumer surplus and consumer expenditure? consumer consumer surplus expenditure A WXY OXY B WXY OXYZ C WYO OXYZ D WYO OYZ

1 marks

Answer: B

This question in 9708/11 Oct/Nov 2017

12 What is meant by consumer surplus? A the amount of money that remains after consumers have made their purchases B the difference between how much a consumer is willing to pay for a good and the amount paid C the difference between the amount of a good that’s bought by a consumer and the amount consumed D the difference between the price paid for a good and the cost of producing it

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2017

13 In the diagram, S1 is the original supply curve and D is the original demand curve. S2 W price S1 V T R P Q D O M N quantity If supply shifts to S2, which area represents the change in consumer surplus? A PQVT B PQW C PRVT D TVW

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2017

12 The table shows the price Rashid is willing to pay for successive bottles of water. bottles of water 1st 2nd 3rd 4th price willing to pay $0.90 $0.80 $0.65 $0.50 If the price is $0.50 and Rashid buys four bottles, what is the monetary value of Rashid’s consumer surplus? A $0.15 B $0.85 C $0.90 D $1.35

1 marks

Answer: B

This question in 9708/13 Oct/Nov 2017

13 A market is in equilibrium at price $5. Market supply changes from being inelastic at each price to become elastic at each price. The market equilibrium price does not change. What is the effect on consumer surplus and producer surplus? consumer producer surplus surplus A rises falls B rises unchanged C unchanged falls D unchanged unchanged

1 marks

Answer: C

This question in 9708/13 Oct/Nov 2017

26 The diagram shows that the imposition of a tariff raises a product’s world price from $10 to $14. domestic supply price D $ 14 10 domestic demand S 0 20 30 70 100 quantity (millions) What was the change in domestic producers’ income as a result of the tariff? A It rose by $120 million. B It rose by $160 million. C It rose by $220 million. D It rose by $280 million.

1 marks

Answer: C

This question in 9708/13 Oct/Nov 2017

12 At first, a television service is available at no charge. The television company then charges viewers $6 per hour to watch its programmes. The demand curve is D. 10 price ($) 6 D 0 0 2000 5000 number of hours viewed What is the value of the loss in consumer surplus and what value of consumer surplus remains after the introduction of the hourly charge? lost consumer remaining consumer surplus ($) surplus ($) A 9 000 4 000 B 9 000 16 000 C 21 000 4 000 D 21 000 16 000

1 marks

Answer: C

This question in 9708/12 Feb/March 2018

13 The diagram shows the European airline market. F S1 price S2 M G H N J K D O R T quantity New entrants have come into the market, shifting supply from S1 to S2. Which area represents the new producer surplus? A GMJ B HNF C HNK D KNTO

1 marks

Answer: C

This question in 9708/12 Feb/March 2018

16 The table shows the demand and supply schedules for a product before and after the government pays a subsidy of $4 per unit to the producers. quantity quantity supplied quantity supplied price demanded before subsidy after subsidy $ (units) (units) (units) 6 250 50 150 8 200 100 200 10 150 150 250 12 100 200 300 14 50 250 350 Assuming that any extra sales are to new consumers, how much do the original consumers of the product save as a result of the subsidy? A $300 B $600 C $900 D $1500

1 marks

Answer: A

This question in 9708/12 Feb/March 2018

10 The diagram shows the demand curve, DD1, and the supply curve, SS1, for eye operations. S D price P O S1 D1 number of operations The operations are provided free to the consumer. Which statement is correct? A Consumer surplus from the operations is ODD1. B The equilibrium price is indeterminate, because the supply curve is vertical. C The equilibrium price is P. D The equilibrium price is zero.

1 marks

Answer: C

This question in 9708/11 May/June 2018

13 The diagram shows the demand curve and supply curve for a product. S X price Y W D O Z quantity Which area represents producer surplus? A OWYZ minus OWY B OWYZ minus OYZ C OXYZ minus OYZ D OXYZ minus WXY

1 marks

Answer: B

This question in 9708/11 May/June 2018

15 The diagram shows the effect on the market for a product of the introduction of a government subsidy. 25 price ($) 20 S1 15 S2 10 D 5 0 0 10 20 30 40 50 60 quantity What is the result of the payment of the subsidy? A Consumer surplus increases. B The price to the consumer halves. C The subsidy provides over half of producer income. D Total consumer expenditure on the product increases.

1 marks

Answer: A

This question in 9708/11 May/June 2018

26 In the diagram, D is a country’s demand curve for an imported good. The country’s government imposes an import tariff equal to PWPC on the good. price PC x y PW z D O quantity Which areas measure the resulting loss in consumer surplus and the resulting gain in government revenue? loss in gain in consumer government surplus revenue A x + y x B x + y z C y x D y z

1 marks

Answer: A

This question in 9708/11 May/June 2018

13 In the diagram, D and S represent the domestic demand and supply curves for a product. Sw represents world supply of the product at a world price of Pw. The initial domestic market equilibrium of the product is at E1. If foreign trade were to be banned completely, the domestic market equilibrium would be at E2. X S price E2 Y E1 Pw Sw Z D O Q1 quantity of products What would be the loss of consumer surplus if all foreign trade were banned? A PwXE1 B PwYE2E1 C YXE2 D ZYE2

1 marks

Answer: B

This question in 9708/12 May/June 2018

7 The diagram shows the demand curve for a product. price M N S Q R D O L P quantity If the rectangle OLMN is equal in area to the rectangle OPQR, which statement is correct? A A rise in price from OR to ON results in the same proportionate fall in quantity demanded. B Consumer surplus falls by RSMN if the price rises from OR to ON. C The price elasticity of demand is unitary for all changes in price. D Total revenue falls by MSQ if the price rises from OR to ON.

1 marks

Answer: A

This question in 9708/13 May/June 2018

12 What is necessary for consumer surplus to be zero? A Demand is perfectly elastic. B Demand is perfectly inelastic. C Supply is perfectly elastic. D Supply is perfectly inelastic.

1 marks

Answer: A

This question in 9708/13 May/June 2018

13 A local government decides to issue a card for residents that gives a 50% reduction on entry prices for visits to local museums. The diagram shows the demand curve for a resident who currently makes 3 museum visits. price ($) W 2 X Y 1 Z 0 3 5 demand for museum visits What would be the change in the resident’s consumer surplus when the card is issued? A W B X + Y C Y D Y + Z

1 marks

Answer: B

This question in 9708/13 May/June 2018

27 A country takes no part in international trade and its domestic market price is Pd. The country decides to engage in free trade and the market price rises to the world price (Pw). Sd price Pw Pw X Z Y Pd Dd O quantity What happens to consumer surplus and producer surplus when the economy engages in free trade? A Domestic consumers gain Z only. B Domestic consumers lose X + Y. C Domestic producers gain Z only. D Domestic producers lose X + Y + Z.

1 marks

Answer: B

This question in 9708/13 May/June 2018

13 The diagram shows the European airline market. The original demand curve is D1 and the original supply curve is S1. There is then an increase in the demand for air travel. F price $ G S1 M H K N D2 J D1 O R T number of passengers Which areas show the consumer surplus and producer surplus at the new equilibrium? consumer producer surplus surplus A FMH HMJ B FMH JMTO C GNK KNJ D GNK KNRO

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2018

13 The diagram shows a competitive market in equilibrium with price P and quantity Q sold. V S price P W U D O Q quantity Which area represents the producer surplus? A OPWQ minus OUWQ B OPWQ minus UPW C OVWQ minus OPWQ D OVWQ minus PVW

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2018

12 In the diagram D1 is the demand curve for Indian tea and S1 is the initial supply curve. S2 price v S1 w x y D1 O quantity The Indian government imposes a tax on tea, which causes the supply curve to shift to S2. Which areas in the diagram measure the resulting tax revenue to the Indian government and the new producer surplus? tax new revenue producer surplus A w + x v B w + x w C w + x + y v D w + x + y w

1 marks

Answer: D

This question in 9708/13 Oct/Nov 2018

13 The diagram shows the supply and demand curve for bananas. V S price W X P2 Y P1 Z D O quantity What happens to consumer surplus when the price increases from P1 to P2? A It decreases by P2VW. B It decreases from P1VY to P2VW. C It increases by WXY. D It increases from P1YZ to P2WYZ.

1 marks

Answer: B

This question in 9708/13 Oct/Nov 2018

10 In the diagram, the supply of a product increases while the demand curve does not shift. S1 price S2 D1 P1 P2 S1 D1 S2 O quantity Which row correctly identifies the resulting impact on consumer and producer surplus? consumer surplus producer surplus A has fallen has fallen B has fallen has risen C has risen has fallen D has risen has risen

1 marks

Answer: D

This question in 9708/12 Feb/March 2019

13 Producer surplus is the difference between A the consumer surplus from the good and the producers’ total cost of supplying the good. B the highest price that the consumer would be willing to pay for the good and the price the producer actually sold it for. C the lowest price that the producer would accept for the good and the price the producer actually sold it for. D the quantity that the producers manufacture in a week and the amount sold to consumers in that week.

1 marks

Answer: C

This question in 9708/12 Feb/March 2019

5 The tariff on Indian goods entering the US falls from 10% to 5%. What will be the most likely effect on the producer and consumer surplus in the US? US producer US consumer surplus surplus A decrease increase B decrease no change C increase increase D increase no change

1 marks

Answer: A

This question in 9708/11 May/June 2019

7 The diagram shows the market for hand-made furniture. price of supply hand-made furniture X P Y Z demand O Q quantity Which area of the diagram represents the producer surplus? A area X B area X + Y C area Y D area Y + Z

1 marks

Answer: C

This question in 9708/11 May/June 2019

11 What is most likely to cause an increase in the consumer surplus in the market for a normal good? A an increase in consumer incomes B an increase in the number of substitute goods C an increase in the price of a complementary good D an increase in the price of the good

1 marks

Answer: A

This question in 9708/12 May/June 2019

14 The diagram shows the effect on the market for rice of a change in government policy that causes a shift in the supply curve from S to S1. price S S1 L K J M D O quantity What does the area JKLM represent? A the cost to the government of a subsidy to rice growers B the extra saving to importers of the removal of a tariff on rice C the increase in consumer surplus from the introduction of a maximum price for rice D the loss in government revenue from the reduction in a lump sum tax on rice

1 marks

Answer: A

This question in 9708/13 May/June 2019

8 The diagram shows the outcome when a landowner, who has allowed motorists to park on his field at no cost, introduces a parking charge of $1. supply charge X $1 Y demand Z O parking spaces What is the loss of consumer surplus that results? A X only B X + Y C Y only D Y + Z

1 marks

Answer: C

This question in 9708/11 Oct/Nov 2019

5 The price of a ticket for an international athletics tournament was $50. All tickets were sold. Which area on the diagram represents consumer surplus? supply 100 price per ZD ticket ($) C 50 B A demand 0 quantity (thousands)

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2019

8 A government introduces a maximum price above the market price. What will be the effect on consumer and producer surplus? consumer surplus producer surplus A fall rise B rise fall C rise unchanged D unchanged unchanged

1 marks

Answer: D

This question in 9708/12 Oct/Nov 2019

9 The diagram shows the European market for diesel fuel and the original equilibrium is at M. S1 price M G H N J D1 D2 O R T quantity Europeans want low-emission cars and therefore the demand for diesel fuel has decreased from D1 to D2. Which area represents the new producer surplus for companies supplying diesel fuel? A GMNH B JGM C JHN D JNR

1 marks

Answer: C

This question in 9708/13 Oct/Nov 2019

6 In the diagram, D is the demand curve for Indian tea exports and S1 is the supply curve when there is a tax on tea exports. S1 price S2 x z w y D O quantity The Indian government removes the tax, which causes the supply curve to shift to S2. Which areas in the diagram measure the resulting loss in tax revenue to the Indian government and the resulting gain in consumer surplus? loss in tax gain in revenue consumer surplus A x w + y B x x + z C x + y z D x + y x + z

1 marks

Answer: D

This question in 9708/11 May/June 2020

9 An indirect tax is imposed on a product in a competitive market. Under which circumstances would the value of the consumer surplus be most likely to remain unchanged? A New substitutes are developed for the product and production costs rise. B Some producers merge so there is less competition in the market. C The product is an inferior good, consumer incomes increase and production costs rise. D The product is a normal good, consumer incomes increase and production costs fall.

1 marks

Answer: D

This question in 9708/11 May/June 2020

12 The diagram represents the market for a good. P price S1 X Y D1 Z O quantity Which statement is correct? A OX represents the price above which no producer wishes to stay in the market. B OZ represents the minimum price consumers are prepared to pay. C PYZ represents the total consumer surplus. D XYZ represents the total producer surplus.

1 marks

Answer: D

This question in 9708/11 May/June 2020

7 The diagram shows a consumer’s demand curve for a product. 30 price ($) 25 20 15 10 5 D 0 5 10 15 quantity How does consumer surplus change as the price of the product rises? A It falls at a constant rate (%) with each $5 rise. B It falls by a constant amount with each $5 rise. C It falls by a decreasing amount with each $5 rise. D It falls by an increasing amount with each $5 rise.

1 marks

Answer: C

This question in 9708/12 May/June 2020

8 The equilibrium price of a product is $10. The government introduces an effective minimum price of $12 for the product. Under which condition will the value of the producer surplus increase the most? price elasticity of demand A 0 B between 0 and 1 C 1 D greater than 1

1 marks

Answer: A

This question in 9708/13 May/June 2020

26 An economy with a long history of extensive barriers to trade decides to switch to totally free trade. What is most likely to increase in the short term? A consumer surplus B government revenue C inflationary pressure D profits of all domestic companies

1 marks

Answer: A

This question in 9708/13 May/June 2020

8 The diagram shows the market for a good with an initial equilibrium price of $10. The demand for the good increases by 40 units at every price causing the equilibrium price to rise to $12. 24 price $ 20 S1 12 10 D2 D1 0 80 100 120 140 quantity What is the value of the producer surplus after the price increase? A $500 B $720 C $1000 D $1440

1 marks

Answer: B

This question in 9708/11 Oct/Nov 2020

7 The diagram shows the market supply and demand for a good. supply price $ S T U V demand O quantity Which area represents producer surplus? A S + T B T C U D U + V

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2020

11 The quantity of a good supplied by a firm is Q. Each of these goods sells for a price of P. The area under the supply curve for Q goods is equal to C. What is the producer surplus of the firm? A P – C B P × Q C (P × Q) – C D (P – C) × Q

1 marks

Answer: C

This question in 9708/13 Oct/Nov 2020

6 The diagram shows the market for sugar which is initially in equilibrium at a price of OP. S price R P P1 S U T D P2 O L M N quantity A government then fixes a maximum price of OP1. What will happen as a result? A a reduction in farmers’ revenue equal to PRSP1 B expenditure on sugar will be equal to PRMO C farmers’ revenue would be P1UNO D producer surplus will be P1SP2

1 marks

Answer: D

This question in 9708/12 Feb/March 2021

8 Which example of consumer behaviour would create consumer surplus? A when a consumer does not spend all of her income each month B when a consumer pays less than they are willing to pay for a good C when a consumer throws away vegetables because they bought too much D when a good is purchased in order to resell it at a higher price

1 marks

Answer: B

This question in 9708/12 Feb/March 2021

11 A private company achieves a producer surplus at the market equilibrium price. What might reduce the size of the private company’s producer surplus? A Private companies choose to prioritise profits over customer needs. B Private companies start to pay dividends out of profits. C The government fixes the price of electricity below the market price. D The private company supply curve becomes more elastic.

1 marks

Answer: D

This question in 9708/12 May/June 2021

12 The diagram shows the outcome when a landowner, who had allowed motorists to park on his field at no cost, introduces a parking charge of $1. supply charge X $1 Y Z demand 0 parking spaces What happens as a result of the change? A The landowner gains a surplus of Y + Z. B The motorist gains a surplus of X + Y. C The ownership of surplus Y changes. D There is a total surplus of X + Y + Z.

1 marks

Answer: C

This question in 9708/13 May/June 2021

8 The table shows the maximum price a consumer would be willing to pay for successive cans of fruit juice. cans first second third fourth fifth price ($) 14 10 6 4 3 The price of a can of fruit juice is $4 and, having bought three cans, the consumer decides to buy a fourth. How does buying the fourth can affect his consumer surplus? A It leaves it unchanged. B It lowers it by $2. C It raises it by $4. D It raises it by $34.

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2021

13 The diagram shows the market for smartphones in India. F price G S M H J N K D1 D2 O R T quantity Rising incomes in India have seen a demand for this normal good shift from D1 to D2. Which area now represents consumer surplus and which area now represents producer surplus? consumer producer surplus surplus A FMH HMK B FMH OKMT C GNJ HMNJ D GNJ JNK

1 marks

Answer: A

This question in 9708/12 Oct/Nov 2021

27 The diagram shows the effect of the United States (US) imposing a tariff on the import of steel in 2018. Z domestic supply of steel price of steel T Y P1 world supply of steel plus tariff U V W X P world supply of steel domestic demand for steel O Q1 Q2 Q3 Q4 quantity of steel Which statement about the impact of the tariff is correct? A Consumer surplus falls from P1TO to PUO. B Domestic output increases from OQ1 to OQ3. C Imports fall from Q1Q4 to Q2Q3. D The tax revenue raised on imports is P1YWP.

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2021

5 What could cause an increase in consumer surplus in the market for a good? an increase in an increase in demand for supply of the good the good A no no B no yes C yes no D yes yes

1 marks

Answer: D

This question in 9708/13 Oct/Nov 2021

6 What will increase the producer surplus of farmers that grow carrots? A a decrease in the demand for carrots B a decrease in the price of carrot seed C a decrease in the price of cabbage D a decrease in the subsidy on carrots

1 marks

Answer: B

This question in 9708/11 May/June 2022

10 What is necessary for consumer surplus to be zero? A Demand is perfectly elastic. B Demand is perfectly inelastic. C Supply is perfectly elastic. D Supply is perfectly inelastic.

1 marks

Answer: A

This question in 9708/11 May/June 2022

17 The diagram shows the market for electricity in a country that has a fixed supply of electricity and introduces a maximum price to make it affordable for poorer households. S price of electricity market price maximum price D O quantity of electricity What will be the effect of this? A It will encourage producers to build more power stations in the future. B It will encourage the development of renewable sources of electricity. C It will increase producer surplus. D It will increase the probability of power cuts.

1 marks

Answer: D

This question in 9708/11 May/June 2022

6 The diagram shows supply and demand for a good. price S A P2 B H E P1 F C G D D O quantity If price increases from P1 to P2, what will happen to consumer surplus? A It falls from ABE to A. B It falls from CDFG to BCD. C It increases from CF to BCEF. D It increases from CF to BCEFH.

1 marks

Answer: A

This question in 9708/12 May/June 2022

11 What is meant by consumer surplus? A It is the amount by which the price consumers are willing to pay exceeds the market price. B It is the difference between the price consumers are willing to pay and the price producers are willing to supply. C It is the discount firms offer to the consumers for buying goods in bulk. D It is the excess of quantity demanded of a product over its quantity supplied at a given price.

1 marks

Answer: A

This question in 9708/13 May/June 2022

10 The diagram shows the demand for and supply of tickets for a music festival. X S price of tickets P1 X1 P2 X2 D O Q1 Q2 quantity (thousands) If tickets are priced at P1, it is anticipated that demand will be Q1. There is a discount for those that buy tickets in the first hour, who will pay P2. All tickets are sold in the first hour. Which area on the diagram shows how much consumer surplus was increased by buying the tickets in the first hour? A P2X2Q2O B P1X1Q1O C P1X1X2P2 D XX1Q1O

1 marks

Answer: C

This question in 9708/14 May/June 2022

17 The market for good X is in equilibrium. A government then introduces an effective minimum price on good X. What will decrease as a result of this minimum price? A the excess supply of the product B the market price of the product C the quantity of the product supplied D the size of the consumer surplus

1 marks

Answer: D

This question in 9708/14 May/June 2022

11 The diagram shows the impact of a fall in the price of oil that will lead to a fall in energy costs for many manufacturers. S1 price S2 L J M K G H D1 O E F quantity What will be the impact of this change on consumer and producer surplus? consumer producer surplus surplus A falls falls B falls rises C rises falls D rises rises

1 marks

Answer: D

This question in 9708/11 Oct/Nov 2022

10 A country has health care provided by the free market. This is replaced by the government provision of Sg free health care. D Sg price $ S 1 p 2 3 4 5 O quantity What is the change in consumer surplus? A from 1 to (1 + 2) B from 1 to (1 + 2 + 3 + 4) C from (1 + 2) to (1 + 2 + 3) D from (1 + 2) to (2 + 3 + 4 + 5)

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2022

27 The diagram shows the effect of introducing a tariff on a product. price domestic supply P2 world supply plus tariff P1 world supply domestic demand O quantity What determines the producer surplus that the tariff generates for domestic producers? A the price elasticities of domestic supply and demand B the tariff rate and the price elasticities of both domestic demand and supply C the tariff rate and the price elasticity of domestic demand D the tariff rate and the price elasticity of domestic supply

1 marks

Answer: D

This question in 9708/12 Oct/Nov 2022

6 Consumer surplus exists in the market for rice. What does this mean? A Consumers benefit from rice production more than producers. B Consumer demand for rice exceeds supply. C Some consumers would be willing to pay more than the market price for rice. D The production of rice exceeds the supply.

1 marks

Answer: C

This question in 9708/13 Oct/Nov 2022

7 The diagram shows the demand curve and supply curve for a product. S X price Y W D O Z quantity Which area represents producer surplus? A OWYZ minus OWY B OWYZ minus OYZ C OXYZ minus OYZ D OXYZ minus WXY

1 marks

Answer: B

This question in 9708/13 Oct/Nov 2022

12 The diagram shows the demand and supply of a good. price S x P y D O Q quantity When the market is in equilibrium, which area measures the difference between what consumers are willing and able to pay and what producers receive at that output? A x B y C x + y D x – y

1 marks

Answer: A

This question in 9708/12 Feb/March 2023

6 What does consumer surplus measure? A the excess profit earned by the producer of a good B the opportunity cost to the consumer of not buying a good C the price the marginal consumer is willing to pay for a good D the consumer’s gain from purchasing a good at a price below what they are willing to pay

1 marks

Answer: D

This question in 9708/11 May/June 2023

8 The diagram shows the European market for diesel fuel and the original equilibrium is at M. S1 price M G H N J D1 D2 O R T quantity Europeans want low-emission cars and therefore the demand for diesel fuel has decreased from D1 to D2. Which area represents the new producer surplus for companies supplying diesel fuel? A GMNH B JGM C JHN D JNR

1 marks

Answer: C

This question in 9708/11 May/June 2023

14 There are 10 000 tickets available to watch a sports final at a national stadium. The initial market equilibrium ticket price is $20. The government decides to fix an effective minimum price for the tickets. Under which conditions will the consumer surplus for the tickets decrease the most as a result of the minimum price? minimum price elasticity price level of demand $ for tickets A 18 –0.5 B 18 –1.5 C 22 –0.5 D 22 –1.5

1 marks

Answer: C

This question in 9708/13 May/June 2023

5 Which statement correctly describes the area of producer surplus on a demand and supply diagram? A It is above the supply curve and below the equilibrium price line. B It is above the supply curve and below the demand curve. C It is below the demand curve and above the equilibrium price line. D It is below the supply curve and above the horizontal axis.

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2023

7 A family is willing to pay a maximum of $600, $500 and $400 for air tickets for the mother, father and daughter to attend a wedding in another city. The airline announces a promotional air fare of $450 per ticket, provided at least three tickets are purchased. What will be the consumer surplus gained by the family if they use the promotional offer? A $100 B $150 C $200 D $250

1 marks

Answer: B

This question in 9708/12 Oct/Nov 2023

5 The diagram shows the market for computers in Pakistan. W supply price Y X demand O Z quantity Which areas represent consumer surplus and consumer expenditure? consumer consumer surplus expenditure A WXY OXY B WXY OXYZ C WYO OXYZ D WYO OYZ

1 marks

Answer: B

This question in 9708/13 Oct/Nov 2023

11 The diagram shows a competitive market in equilibrium with price P and quantity Q sold. V S price P W U D O Q quantity Which area represents the producer surplus? A PWU B PVW C OUWQ D OPWQ

1 marks

Answer: A

This question in 9708/12 Feb/March 2024

9 In which row are both statements correct? consumer surplus producer surplus A the value that consumers gain from the difference between the consuming a good over and above the actual revenue received by firms for a value that would have been gained from good and the profit maximising revenue consuming the next best alternative B the value that consumers gain from the difference between the price received consuming a good over and above by firms for a good or service and the the price paid price at which they would have been prepared to supply that good C the value that consumers gain from the difference between the actual revenue consuming a good over and above received by firms for a good and the profit the price paid maximising revenue D the value that consumers gain from the difference between the price received consuming a good over and above the by firms for a good and the price at which value that would have been gained from they would have been prepared to supply consuming the next best alternative that good

1 marks

Answer: B

This question in 9708/11 May/June 2024

7 The diagram shows the movement of the supply curve for a product from S1 to S2. S1 price S2 P O Q1 Q2 quantity At price P, what happens to the price elasticity of supply for the product and the producer surplus when the supply curve moves? price elasticity producer of supply surplus A more elastic decreases B more elastic increases C unchanged decreases D unchanged increases

1 marks

Answer: D

This question in 9708/12 May/June 2024

10 The diagram shows the impact of an increase in the price of a product from P1 to P2. R price S P2 T P1 D O Q2 Q1 quantity demanded Which area represents the consumer surplus after the price change? A P1P2ST B P2RS C ORSQ2 D OP2SQ2

1 marks

Answer: B

This question in 9708/12 May/June 2024

27 A country imports natural gas for which it has price-inelastic demand. What is the effect if that country imposes an import duty on the gas? A Consumers in the importing country will suffer a loss of consumer surplus. B The exporting country will gain export revenue. C The importing country’s primary income will increase. D The price of natural gas will rise in other importing countries.

1 marks

Answer: A

This question in 9708/13 May/June 2024

7 What is most likely to cause an increase in the consumer surplus in the market for a normal good? A an increase in consumer incomes B an increase in the number of substitute goods C an increase in the price of a complementary good D an increase in the price of the good

1 marks

Answer: A

This question in 9708/11 Oct/Nov 2024

10 The diagram shows a shift of the supply curve in a market from S1 to S2. S2 price $ S1 P2 s t P1 u v w D z O quantity How will the consumer surplus and producer surplus change? consumer surplus producer surplus A decreases by s increases by s + u – t B decreases by s increases by u + v – w C decreases by s + t increases by s + t – v D decreases by s + t increases by s + z – v

1 marks

Answer: D

This question in 9708/12 Oct/Nov 2024

10 Different areas on the diagram represent different aspects of a market. S price R T S U D E F O G H I quantity Which row correctly identifies the three variables shown? consumer producer total consumer surplus surplus expenditure A RST TUOG STEU B RST UST STGO C RTU UTE STGO D RTEU TEF RFU

1 marks

Answer: B

This question in 9708/13 Oct/Nov 2024

7 The diagram represents the market for a good. P price S1 X Y D1 Z O quantity Which statement is correct? A OX represents the price above which no producer wishes to stay in the market. B OZ represents the minimum price consumers are prepared to pay. C PYZ represents the total consumer surplus. D XYZ represents the total producer surplus.

1 marks

Answer: D

This question in 9708/12 Feb/March 2025

10 The diagram shows the demand for and supply of a product. Which area shows producer surplus? price S A B C D D O quantity

1 marks

Answer: B

This question in 9708/11 May/June 2025

9 An increase in which variable will always lead to an increase in the consumer surplus? A cost of production B maximum price C minimum price D subsidy

1 marks

Answer: D

This question in 9708/12 May/June 2025

7 The diagram shows the market for computers in a country. W supply price Y X demand O Z quantity Which area represents consumer surplus? A WYX B XYO C WYO D OYZ

1 marks

Answer: A

This question in 9708/13 May/June 2025

15 An indirect tax is imposed on a product. S2 U S1 price V Z W Y X D O quantity What is the change in consumer surplus? A UWY B UVZ C ZVWY D ZVXY

1 marks

Answer: C

This question in 9708/11 Oct/Nov 2025

6 What is consumer surplus? A the amount of a consumer’s income less the amount paid in income tax B the amount of a consumer’s income less the amount paid for goods and services C the amount of a consumer’s income received in bonuses and overtime pay D the amount a consumer is willing to pay for a product less the amount actually paid

1 marks

Answer: D

This question in 9708/12 Oct/Nov 2025

30 The diagram shows the effect of a government removing the tariff on imports of rice into its country. Sdomestic price of rice W V P1 Sworld + tariff P2 Sworld R X T U Ddomestic O Q1 Q2 Q3 Q4 quantity of rice How would the removal of this tariff affect the consumer surplus and the government's revenue? consumer surplus government revenue A increases by VUT decreases by WVTX B increases by VUT decreases by WVQ3Q2 C increases by P1VUP2 decreases by WVTX D increases by P1VUP2 decreases by WVQ3Q2

1 marks

Answer: C

This question in 9708/12 Oct/Nov 2025

12 The market for good X is in equilibrium when its price is $10. The government decides to set a maximum price for good X. Which maximum price will cause the largest change in consumer surplus? maximum price for good X ($) A 9 B 10 C 11 D 12

1 marks

Answer: A

This question in 9708/13 Oct/Nov 2025