In this graph showing welfare effects of a price floor when the government buys the surplus, the cost to the government, area c + d + f + g + h + i, ______.
a. demonstrates that price floors convey a net welfare gain to society
b. is larger than the gain to producers, resulting in a deadweight loss
c. is equal to the gain to producer and consumers, creating equilibrium
d. allows producer surplus to grow while steadily maintaining consumer surplus
b. is larger than the gain to producers, resulting in a deadweight loss
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Which of the following correctly describes how an increase in the price level affects consumption spending?
A) An increase in the price level lowers real wealth, which causes consumption to decrease. B) An increase in the price level raises real wealth, which causes consumption to increase. C) An increase in the price level increases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase. D) An increase in the price level decreases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase.
The average product of a variable input is calculated as:
A) total product divided by total output. B) the change in total product divided by the change in the variable input. C) total product divided by the change in the variable input. D) total product divided by the total quantity of the variable input.
Critics of unconventional monetary policies argue that such operations take the Fed beyond its proper powers, may politicize it, and can unleash future inflation.
Answer the following statement true (T) or false (F)
Which of the following would not be considered an internal force that helps move the economy out of a trough?
a. the replacement of worn-out capital b. higher interest rates c. the replacement of depleted inventories d. costs falling lower than prices