Refer to the information provided in Figure 6.3 below to answer the question(s) that follow.
Figure 6.3Refer to Figure 6.3. Molly's budget constraint is AB. It would swivel to AD if the price of
A. CDs increased.
B. DVDs decreased.
C. CDs decreased.
D. DVDs increased.
Answer: B
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Social surplus is:
A) the product of consumer surplus and producer surplus. B) the consumer surplus minus producer surplus. C) the ratio of consumer surplus to producer surplus. D) the sum of consumer surplus and producer surplus.
An efficient use of resources occurs when
A) there is a deadweight loss. B) the total social benefit of a good equals its total social cost. C) there is perfect price discrimination by a monopoly. D) there is no producer surplus.
If indifference curves are concave to the origin, which assumption on preferences is violated?
A) Diminishing marginal rates of substitution B) Transitivity of preferences C) More is preferred to less D) Completeness
"Scarcity implies that some way of rationing goods must be found." Explain what this statement means. How is this rationing done?
What will be an ideal response?