Define: the special interest effect. Give examples. Why would producers seek political favors that have the effect of reducing producer surplus? Explain verbally and graphically.

Define: rent seeking. Explain, verbally and graphically, the economic case against minimum wages. Who benefits from minimum wage laws? How does rent seeking fit into this analysis?

An increase in market demand for a normal good other things being equal will lead to
a. A fall in consumer surplus and a rise in producer surplus
b. A fall in both consumer and producer surplus
c. A rise in consumer surplus and a fall in producer surplus
d. A rise in both consumer and producer surplus

Consumer surplus in a market will tend to be higher when demand is
a. income elastic
b. income inelastic
c. price inelastic
d. price elastic

Which of the following is a true statement about the effect of a government-imposed minimum price floor when the price set is above the normal free market price?
a. If the government imposes a price floor, total consumer surplus will decrease
b. If the government imposes a price floor, all firms in the market will gain
c. If the government imposes a price floor, there will be a shortage
d. If the government imposes a price floor, consumer surplus will increase

What is the definition of consumer surplus?
a. The difference between the consumer's willingness to pay and and the price actually paid for the product.
b. The total value placed on products by the marke
c. The difference between the consumer's willingness to pay and the firm's cost of the product.
d. The total value placed on products by consumers

Most of the benefits to agricultural support schemes such as the European Common Agricultural Policy go to
a. Consumers
b. The Government
c. Producers
d. Everyone gains equally from price supports