Consumer Surplus

question 158

Multiple Choice

Consumer surplus

• A) is the difference between total willingness to pay and the total amount actually paid.
• B) guarantees that the market value of a good in money is equal to the total economic value of the good.
• C) is always negative because of diminishing marginal utility.
• D) is the total area under a consumer's demand curve.

Articulate the economic inefficiencies associated with monopolies and oligopolies, including allocative inefficiency.

Identify the conditions that lead to the formation of monopolies and oligopolies.

Evaluate the role of government intervention in correcting market failures caused by monopolies and oligopolies.

Assess the strategic behavior of firms within oligopolies, including price-fixing and collusion.

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Definitions:

Revenue and Spending Variance

The difference between the expected (budgeted) and actual amounts of revenue and expenses.

Flexible Budget Performance Report

A financial report that compares actual operating results to budgeted amounts adjusted for actual activity levels.

Activity Variance

The difference between the planned budget of an activity and the actual expenses incurred.

Net Operating Income

The earnings derived from the primary activities of a business before the subtraction of any taxes and interest charges.