Economics 9708 · AS & A Level
Cross elasticity of demand
100 practice questions on Cross elasticity of demand, with worked solutions and instant marking.
A familiar clothes retailer plans a summer sale in its stores. Consequently, the number of shoppers using the stores rises. Which areas show the change in consumer surplus for the customers who would have purchased the clothes anyway, and the surplus for the new customers?
Feb/March 2017
Initially, the television service can be viewed free of charge. The television company then starts to charge viewers $6 per hour to watch its programmes. The demand curve is D. What is the value of the fall in consumer surplus, and what value of consumer surplus is left after the hourly charge is introduced?
Feb/March 2018
The diagram illustrates the European airline market. New firms have entered the market, causing supply to shift from S1 to S2. Which area shows the new producer surplus?
Feb/March 2018
In the diagram, the supply of a product rises while the demand curve stays fixed. Which row correctly shows the effect on consumer surplus and producer surplus?
Feb/March 2019
Producer surplus is the gap between
Feb/March 2019
Which example of consumer behaviour would result in consumer surplus?
Feb/March 2021
The diagram depicts a competitive industry with constant marginal and average costs. In equilibrium, its output is OQC and its price is OPC. A sequence of horizontal mergers produces economies of scale and results in a monopoly within the industry. The revised equilibrium output is OQM and the price is OPM. Which area shows the producer surplus after these mergers?
Feb/March 2021
The diagram illustrates the demand and supply of a good. At market equilibrium, which area represents the gap between the amount consumers are willing and able to pay and the amount producers receive at that level of output?
Feb/March 2023
The diagram illustrates a competitive market in equilibrium at price P and quantity Q sold. Which area shows the producer surplus?
Feb/March 2024
The diagram illustrates a demand curve for trips along a toll road. If the toll falls from $5 to $3, what increase in the daily consumer surplus results?
May/June 2010
The diagram illustrates a demand curve for trips on a toll road. If the toll falls from $5 to $3, what increase in daily consumer surplus results?
May/June 2010
The diagram illustrates a demand curve for trips along a toll road. If the toll is cut from $5 to $3, by how much does daily consumer surplus increase?
May/June 2010
Using a normal demand curve, explain how consumer surplus is created.
May/June 2010
The table gives the highest amount that each of three students would be prepared to pay for a taxi journey home from a night club. Assume that the taxi fare is shared as shown in the table below. Which option shows the amount each should pay so that they all receive the same consumer surplus?
May/June 2012
The diagram illustrates the impact of introducing a tax of FG on a commodity. Which area shows the fall in consumer surplus?
May/June 2012
In the diagram, introducing a tax on a commodity moves its supply curve from S1 to S2. Which area represents the deadweight loss that results?
May/June 2012
The diagram illustrates the demand and supply curves for a product. Which area represents the total amount that consumers would be prepared to pay for the equilibrium level of output?
May/June 2013
The diagram illustrates how the number of passengers changes when a company lowers the fare for a train trip from OP1 to OP2. Which areas represent the consumer surplus at the new fare for the original passengers and for the extra passengers?
May/June 2013
The diagram illustrates a consumer’s demand curve for a product. How does consumer surplus change as the product price falls in $5 increments from $20 to $5?
May/June 2013
The diagram illustrates an industry’s supply and demand curves. At first, the government limits output to OQ. This output restriction is then lifted. Assuming there are no externalities, which area on the diagram shows the net increase in economic welfare?
May/June 2013
The diagram illustrates an industry’s supply and demand curves. At first, the government limits output to OQ. That quantity restriction is then lifted. If there are no externalities, which area on the diagram shows the net gain in economic welfare?
May/June 2013
How would you define consumer surplus?
May/June 2014
The diagram illustrates how an industry’s cost of production changes when it shifts from perfect competition to monopoly. The demand for the industry’s product remains unchanged. What impact will this change in market structure have on price, output and consumer surplus?
May/June 2014
The diagram illustrates a demand curve for trips on a toll road. If the toll is cut from $5 to $3, what increase in daily consumer surplus results?
May/June 2015
Producer surplus is the gap between
May/June 2015
The diagram illustrates how the rice market is affected when a change in government policy shifts the supply curve from S to S1. What is represented by the area JKLM?
May/June 2015
The table sets out the price Rashid is prepared to pay for each successive cake and the cost of producing it. If the price is $0.50 and Rashid purchases four cakes, what is the monetary value of the consumer surplus and the producer surplus?
May/June 2016
The diagram illustrates a consumer’s demand curve for a product. How does consumer surplus change as the product’s price rises in $5 increments between $5 and $20?
May/June 2016
The diagram presents an industry’s supply and demand curves. At first, the government limits output to OQ. This output restriction is then lifted. If there are no externalities, which area on the diagram represents the net increase in economic welfare?
May/June 2016
The diagram illustrates the market for new cars. At present, the government has set the quantity supplied at S1. If the market were deregulated, the supply curve would shift to S2. Which area shows the net welfare gain from removing the restriction on the quantity supplied?
May/June 2016
The table gives the highest amount that three students would each be prepared to pay for a taxi to take them home from a nightclub. Assume that they split the taxi fare as set out in the table below. Which shows how much each of them should pay so that they all gain the same consumer surplus?
May/June 2017
The diagram illustrates the demand and supply curves for a good over a particular period. Market price is represented by P and the quantity traded by point M. Which area shows producer surplus?
May/June 2017
D1 and S1 show the original demand and supply curves for a product. D2 and S2 indicate the corresponding curves after market conditions change. What are the resulting changes in consumer and producer surplus?
May/June 2017
The diagram illustrates the demand curve and the supply curve for a product. Which area shows producer surplus?
May/June 2018
What condition must hold for consumer surplus to be zero?
May/June 2018
A local government plans to provide residents with a card that cuts entry charges by 50% for visits to local museums. The diagram displays the demand curve for a resident who currently takes 3 museum visits. What change would occur in the resident’s consumer surplus once the card is issued?
May/June 2018
A product’s demand curve is displayed in the diagram. What does X maximise?
May/June 2018
The diagram illustrates the market for hand-made furniture. Which region of the diagram indicates the producer surplus?
May/June 2019
Which change is most likely to raise consumer surplus in the market for a normal good?
May/June 2019
How much must the demand curve move for farm incomes to stay the same? (Diagram: demand curve D; supply changes from S1 to S2 following a good harvest.)
May/June 2020
How is consumer surplus affected when the product price goes up? (Diagram: consumer demand curve showing price rises of $5.)
May/June 2020
The equilibrium price of a product is $10. The government sets an effective minimum price of $12 for the product. In which condition will the producer surplus rise by the greatest amount?
May/June 2020
A government aims to encourage young adults to purchase their first home by offering a subsidy to the builder. Which region on the diagram shows the magnitude of the consumer surplus for those who buy a house with this subsidy?
May/June 2021
A private company earns a producer surplus at the market equilibrium price. What could cause the private company’s producer surplus to become smaller?
May/June 2021
With the aid of diagrams, Explain how consumer surplus changes when the price of a luxury product with many substitutes decreases, and when the price of an essential product with few substitutes decreases.
May/June 2021
What condition must hold for consumer surplus to be zero?
May/June 2022
What would raise the producer surplus of farmers who grow carrots?
May/June 2022
The diagram illustrates supply and demand for a good. If price rises from P1 to P2, what happens to consumer surplus?
May/June 2022
What does consumer surplus mean?
May/June 2022
The diagram illustrates the impact on the market for rice of a change in government policy which shifts the supply curve from S1 to S2. What does the area JKLM represent?
May/June 2022
What is consumer surplus measuring?
May/June 2023
The diagram illustrates the European diesel fuel market, where the initial equilibrium is at M. Because Europeans prefer low-emission cars, demand for diesel fuel has fallen from D1 to D2. Which area shows the new producer surplus for firms that supply diesel fuel?
May/June 2023
There are 10 000 tickets on sale for a sports final at a national stadium. The original market equilibrium price of each ticket is $20. The government chooses to set a binding minimum price for the tickets. Under which conditions will consumer surplus for the tickets fall by the greatest amount as a result of the minimum price?
May/June 2023
Using diagram(s), explain what is meant by consumer surplus and producer surplus and assess whether a rise in the price of a product caused by higher costs of production is likely always to reduce consumer surplus.
May/June 2023
Explain, using examples, how the size and sign of the coefficient of income elasticity of demand matter for classifying a good, and consider the extent to which you are confident in that classification.
May/June 2023
The diagram illustrates the demand and supply for a good, together with the marginal social costs (MSC) of that good. If there are no external benefits, which area represents the net social benefit at output OQ?
May/June 2023
The diagram illustrates demand and supply for a good, together with the marginal social costs (MSC) of producing it. If there are no external benefits, which area represents the net social benefit at output OQ?
May/June 2023
Certain firms regularly apply price discrimination. Assess the view that, whenever this happens, price discrimination will always favour the producer while doing so at the cost of the consumer and society.
May/June 2023
The diagram illustrates the demand for and supply of a product. Which area represents producer surplus?
May/June 2025
A rise in which variable will always cause consumer surplus to rise?
May/June 2025
The diagram illustrates the market for computers in a country. Which region shows consumer surplus?
May/June 2025
What evidence is shown in the article that the UK mobile phone companies operate in an imperfect market structure?
Oct/Nov 2005
The table gives the highest amount a consumer would pay for each additional can of fruit juice. One can of fruit juice costs $4 and, after purchasing three cans, the consumer chooses to purchase a fourth. What effect does buying the fourth can have on his consumer surplus?
Oct/Nov 2009
The table lists the highest amount a consumer would be prepared to pay for each extra can of fruit juice: first $14, second $10, third $6, fourth $4, fifth $3. The price is $4 and, after buying three cans, the consumer chooses to purchase a fourth. How will buying the fourth can change his consumer surplus?
Oct/Nov 2009
The diagram depicts an industry operating with constant average costs. In perfect competition, output is OV. If the industry were to turn into a monopoly, which area represents the reduction in consumer surplus?
Oct/Nov 2009
The diagram represents an industry operating with constant average costs. In perfect competition, this industry produces output OV. Which area shows the reduction in consumer surplus if it were to turn into a monopoly?
Oct/Nov 2009
In the diagram, which region shows the quantity of consumer surplus that would arise in a market if a government imposed an effective maximum price?
Oct/Nov 2010
Which region in the diagram shows the size of consumer surplus that would arise in a market if the government imposed an effective maximum price?
Oct/Nov 2010
A company wants to take some of the consumer surplus that its customers currently receive. How could it do this?
Oct/Nov 2010
A firm wants to capture some of the consumer surplus that its customers now receive. In what way could it do this?
Oct/Nov 2010
A company wants to capture some of the consumer surplus that its customers presently receive. In what way could it do this?
Oct/Nov 2010
Following the movement of the supply curve from S to S1 in the rice market, what does the area JKLM show?
Oct/Nov 2011
What condition must hold for consumer surplus to be zero?
Oct/Nov 2011
On the diagram, S1 is the original supply curve and D is the original demand curve. If supply moves to S2, which area shows the change in consumer surplus?
Oct/Nov 2011
The diagram illustrates the effect on the market for rice of a change in government policy that shifts the supply curve from S to S1. What does the area JKLM represent?
Oct/Nov 2011
What condition must be met for consumer surplus to equal zero?
Oct/Nov 2011
What will happen to consumer surplus if the supply of a product with a normal demand curve is halved?
Oct/Nov 2012
The diagram shows a market for a good where the equilibrium price is OU. The government sets a maximum price of OV. What effect will this have on consumer surplus?
Oct/Nov 2012
Explain, with the aid of a diagram, what changes will alter the amount of consumer surplus available from the consumption of a good.
Oct/Nov 2012
The diagram illustrates an industry’s supply and demand curves. If externalities are absent, which area on the diagram represents the net decrease in economic welfare when the government limits output to OQ?
Oct/Nov 2012
Rather than setting one uniform price for every customer, a firm chooses to set different prices across separate markets. How will this probably influence consumer surplus and the firm's marketing costs?
Oct/Nov 2012
The table indicates the price Rashid is prepared to pay for each additional can of cola. If the price is $0.50 and Rashid purchases four cans, what is the money value of Rashid’s consumer surplus?
Oct/Nov 2013
A consumer wanted to buy a new camera and a new armchair. She was willing to pay $500 for either item. She found that the camera was priced at $450 and the armchair at $500. She chose the camera. What were her opportunity cost and her consumer surplus?
Oct/Nov 2013
A consumer had saved $700 and chose to use the money on a new television instead of a new washing machine. On visiting the shop, she found that the television cost $500 and the washing machine cost $400. She purchased the television. What were the consumer surplus and the opportunity cost?
Oct/Nov 2013
The diagram illustrates the market for new cars. At present, the government fixes the quantity supplied at S1. If the market were deregulated, the supply curve would shift to S2. Which area represents the net welfare gain from removing the restriction on the quantity supplied?
Oct/Nov 2013
The gap between the price consumers pay for a product and the maximum amount they are willing to pay is called
Oct/Nov 2014
The table sets out the highest price a consumer is prepared to pay for each successive can of fruit juice. A can costs $4, and after buying three cans, the consumer chooses to purchase a fourth. What effect does buying the fourth can have on his consumer surplus?
Oct/Nov 2014
A business wants to capture some of the consumer surplus that its customers presently receive. In what way could it do this?
Oct/Nov 2014
The diagram illustrates the European airline market. New entrants have entered the market, causing supply to move from S1 to S2. Which area shows the new producer surplus?
Oct/Nov 2015
The diagram illustrates one person’s demand curve for a commodity. The supplier sets a unit price of OP, but buyers must currently buy at least OQ. Which area or areas in the diagram represent the net increase in consumer surplus after the minimum purchase requirement is removed?
Oct/Nov 2015
The diagram illustrates a competitive market in equilibrium at price P and quantity Q. Which region represents consumer surplus, and which region represents producer surplus?
Oct/Nov 2015
The table provides details about the 2011 Australian Grand Prix in Australian dollars (AUD). What was the worth of the welfare outcome from staging the Australian Grand Prix?
Oct/Nov 2015
The diagram depicts an industry's supply and demand curves and the areas u, v, w and x. If there are no externalities, which area represents the net loss in economic welfare when the government limits output to OQ?
Oct/Nov 2015
The diagram illustrates the market for computers in Pakistan. What can be concluded about the size of consumer surplus?
Oct/Nov 2016
The diagram illustrates the supply and demand curves for a commodity. A government subsidy shifts the supply curve from S1 to S2. Which area represents the gap between the cost to the economy of producing the resulting rise in output (Q1–Q2) and the value that consumers assign to this increase in output?
Oct/Nov 2016
The diagram indicates that demand for a good rises from D1 to D2. What effect does this change in demand have on producer surplus?
Oct/Nov 2016
The diagram illustrates the market for computers in Pakistan. Which regions show consumer surplus and consumer expenditure?
Oct/Nov 2017
What does the term consumer surplus mean?
Oct/Nov 2017
In the diagram, S1 shows the initial supply curve and D shows the initial demand curve. If supply moves to S2, which area shows the change in consumer surplus?
Oct/Nov 2017
The table gives the price Rashid is prepared to pay for each additional bottle of water. If the price is $0.50 and Rashid buys four bottles, what is the monetary value of Rashid’s consumer surplus?
Oct/Nov 2017