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- Subject
- Surpluseconomics-mcqs › surplus
- Published
- 29 May 2019
- Last updated
- 28 May 2026
There are three identical vases available for purchase. Buyer 1 values a vase at Rs30, buyer 2 values it at Rs25, and buyer 3 values it at Rs20. If the selling price is set at Rs25, how many vases will be sold, and what will be the total consumer surplus in this market?
Multiple choice question for Surplus. Select an option, then review the explanation below.
Explanation
At a price of Rs25, Buyer 1 (willing to pay Rs30) and Buyer 2 (willing to pay Rs25) will purchase the vases, while Buyer 3 (willing to pay Rs20) will not. Therefore, two vases are sold. The consumer surplus is calculated as the difference between the buyers' willingness to pay and the price: (Rs30 - Rs25) + (Rs25 - Rs25) = Rs5 + Rs0 = Rs5.
More Surplus MCQs
Practice related questions from the same subject.
- 1.When a market produces an externality, how effective are free market solutions?
- 2.When a producer possesses market power and can affect the product's price, how do free market outcomes typically perform?
- 3.Assuming buyers act rationally and there is no market failure, what can be said about free market outcomes?
- 4.According to Adam Smith's concept of the invisible hand, what is the result of a competitive market equilibrium?
- 5.If a new bicycle is priced at Rs 300, Natalie values it at Rs 400, and the production cost for the seller is Rs 200, what is the total surplus when Natalie purchases the bicycle?