Question

At an equilibrium price of $50 for a barrel of oil,                            [ Select ]                       ["consumer surplus", "surplus", "shortage", "producer surplus"]         exists when buyers were willing to pay prices above $50 and                            [ Select ]                       ["producer surplus", "consumer surplus", "shortage", "surplus"]         exists when sellers were willing to sell at prices below $50.

If price is above equilibrium, such as at $60, this results in a                            [ Select ]                       ["shortage", "surplus", "producer surplus", "consumer surplus"]         .

Answer 1

1. Consumer surplus.

Consumer surplus is the the difference between price of the good prevailing in the market and the price that consumers are willing to pay. In this case consumers are willing to pay more than what is prevailing in the market, hence this is a situation of consumer surplus or there exist positive consumer surplus.

2. Producer surplus

Producer surplus is the the difference between price of the good prevailing in the market and the price at which the producers are willing to sell. In this case producers are willing to sell at a price which is lower than that of prevailing in the market, hence this is a situation of producer surplus or are there exist positive producer surplus.

3. Surplus

If the price is above equilibrium then, at this price the supply of the goods will be higher than the equilibrium level of goods, and also the demand for the goods will be lower than the equilibrium level of goods. As a result at a price of $60 supply will be get a then demand, hence there will be a surplus.