Texas A&M University (TAMU) ECON202 Practice Exam 2

The statement that consumer surplus measures the net benefit from participating in a market is accurate because consumer surplus represents the difference between what consumers are willing to pay for a good or service and what they actually pay. This difference signifies the additional benefit that consumers receive from purchasing a product at a lower price than they would have been willing to pay. Hence, consumer surplus captures the net benefit that consumers gain from their engagement in the market.

In equilibrium, while it’s true that both consumer surplus and producer surplus exist, the equality of these two surpluses is not guaranteed, thus making the second statement inaccurate. The third statement about producer surplus is misleading because producer surplus does not reflect the total benefit received by producers; rather, it measures the difference between the price producers receive and the minimum price they would be willing to accept. Lastly, consumer surplus does not quantify the total benefit from market participation, but rather the net benefit, which further distinguishes the nature of consumer surplus.