True or False:
1. A lower price will increase your consumer surplus for each of the units you were already consuming and will also increase your consumer surplus from increased purchases at the lower price.
2. Because some units can be produced at a cost that is lower than the market price, the seller receives a surplus, or net benefit, from producing those units.
3. Producer surplus is shown graphically as the area under the demand curve and above the supply curve.
4. If the market price of a good falls as a result of a decrease in demand, additional producer surplus is generated.
5. At the market equilibrium, both consumers and producers benefit from trading every unit up to the market equilibrium output.
6. Once the equilibrium output is reached at the equilibrium price, all of the mutually beneficial trade opportunities between the suppliers and the demanders will have taken place, and the sum of consumer and producer surplus is maximized.
7. The deadweight loss of a tax is the difference between the lost consumer and producer surpluses and the tax revenue generated.
8. The deadweight loss of a tax occurs because the tax reduces the quantity exchanged below the original output level, reducing the size of the total surplus realized from trade.