Briefly describe the significance of equilibrium output and price on consumer and producer surplus.
What will be an ideal response?
The buyer purchases the good, EXCEPT for the very last unit, for less than the maximum amount she would have been willing to pay; the seller receives for the good, EXCEPT for the last unit, more than the minimum amount for which he would have been willing to supply the good. Once the equilibrium output is reached at the equilibrium price, all the mutually beneficial trade opportunities between the demander and supplier will have taken place, and the sum of consumer surplus and producer surplus is maximized. This is where the marginal benefit to buyers is equal to the marginal cost to producers. Both buyer and seller are better off from each of the units traded than they would have been if they had not exchanged them.
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In 2014, foreign purchases of U.S. corporate stocks and bonds
A) doubled. B) grew at a faster pace than foreign investment in U.S. corporate bonds. C) grew at a faster pace than foreign investment in U.S. government bonds. D) fell.
The impact of immigration on an economy's steady state capital-labor ratio is reduced to the extent that the immigrants tend to ________ than the native population
A) save more B) have higher fertility C) have lower income D) be younger
What is a mutual fund? What advantage does owning a share in a mutual fund have over owning a share of stock?
Which of the following did not contribute to the severity of the Great Depression?
a. a sharp reduction in the money supply during the early 1930s b. a large tax increase (to balance the budget) in the early 1930s c. substantial increases in the tariff rates on imported goods d. a reduction in government expenditures and a substantial cut in personal income tax rates during 1932 and again in 1936