Suppose a market is in equilibrium. The area below the demand curve and above the market price is:
A. total economic surplus.
B. consumer surplus.
C. producer surplus.
D. the loss in total economic surplus.
Answer: B
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Production possibilities frontiers usually curve out and away from the origin. The implication of this curvature is that
A) as resources are used to produce one good, fewer resources are available to produce another good. B) technological change is present. C) the opportunity cost of producing a good stays the same regardless of how much of that good is produced. D) some resources are better at producing one good while other resources are better at producing alternative goods. E) the opportunity cost of producing a good goes down as more of that good is produced.
When the EPA requires that specific abatement equipment be installed in cars:
A. total vehicle emissions might increase. B. total vehicle emissions must decrease, and the most efficient technology is used. C. total emissions will remain the same, but the most efficient technology must be used. D. total emissions must decrease, but the technology may not be the most efficient.
The added return an investor needs to compensate for the risks of future payments is called a(n)
A. internal rate of return. B. present discounted value. C. marginal risk product. D. risk premium.
Explain whether you agree with the following statement: Some economists claim that the recession of 2007 - 2009 was caused by a decline in spending on residential construction. This can't be true. If there had just been a decline in spending on residential construction, the only firms hurt would have been home builders and firms selling lumber and other goods used in building houses. In fact, many firms experienced falling sales during that recession, including automobile, appliance, and furniture firms.
A. I agree - the decline in spending on residential construction can't be the cause of the recession B. I disagree - the commentator assumes that the multiplier is greater than zero C. I disagree - the commentator ignores the additional rounds of spending that make up the multiplier process