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Consider the gasoline market. If the price of crude oil, an input in the production of gasoline, falls, what effect will this have on consumer surplus in the gasoline market? (Hint: Draw the demand and supply curves, identify CS and PS, shift the appropriate curve, and then see which answer is correct).

When government imposes price ceilings and floors in markets,

Suppose you observe a market with a persistent surplus. Which of the following would be consistent with this observation?

A tax on buyers would have the exact same impact on a market as if you placed the tax on sellers.

Willingness to pay is the minimum amount a buyer will pay for a good, and it measures how much the buyer values the good.

Suppose that a baseball glove costs $100. Now suppose that the government imposes a $9 tax on baseball gloves. The new market price will be $109. 

Consider the following picture of a demand curve. Which area would represent the consumer surplus if price is P1? 

Total surplus is the area under the demand curve and above the supply curve.

Which of the following are other rationing mechanism that emerge when a binding price ceiling is imposed in a market? (Select all that apply)

Chad is willing to pay $4.00 to get his first cup of morning coffee. He buys a cup from a vendor selling coffee and gets $1.75 of consumer surplus. Chad paid ______ for the cup of coffee.