A drought destroys much of the peach crop. As a result, consumer surplus in the peach market:
A. increases.
B. decreases.
C. remains unchanged.
D. equals the deadweight loss increase.
Answer: B
You might also like to view...
If, when a firm doubles all its inputs, its average cost of production increases, then production displays
A) economies of scale. B) diminishing returns. C) diseconomies of scale. D) declining fixed costs.
When studying individuals' economic behavior, economists assume that
A) individuals understand the rationale for all their actions. B) individuals act as if they were rational. C) only educated people act as if they were rational. D) self-interest is of limited relevance in predicting an individual's actions.
The First Theorem of Welfare Economics states that:
a. only Walrasian equilibria can be Pareto optimal. b. all Walrasian equilibria are Pareto optimal. c. a Walrasian equilibrium price vector can always be found. d. some Walrasian equilibria may be unfair.
If the absolute price elasticity of demand is 2.0, a 10 percent decrease in price will increase quantity demanded by
A) 10 percent. B) 20 percent. C) 5 percent. D) 12 percent.