What happens to producer surplus and consumer surplus if transaction costs are reduced?
What will be an ideal response?
Consumer-borne transaction costs reduce both consumer surplus and producer surplus by reducing the volume of trade. Therefore, reducing consumer-borne transaction costs increases both consumer surplus and producer surplus. Producer-borne transaction costs reduce both consumer surplus and producer surplus by reducing the volume of trade. Therefore, reducing producer-borne transaction costs increases both consumer surplus and producer surplus.
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In the short run, the monopolist should continue to produce whenever
a. price is greater than zero b. price is less than average total cost c. price is greater than average variable cost d. price divided by average total cost exceeds the ratio of marginal cost to average cost at the optimal output e. price is less than average variable cost at the optimal output
If the reserve ratio increased from 10 percent to 20 percent, the money multiplier would
a. rise from 10 to 20. b. rise from 5 to 10. c. fall from 10 to 5. d. not change.
Explain why an increase in expected inflation will result in an increase in nominal interest rates, holding other factors constant.
What will be an ideal response?
Why have poverty rates fallen for the elderly since 1960?
What will be an ideal response?