If the marginal cost curve of all identical firms in a perfectly competitive industry are horizontal at the same per-unit cost, then the market's consumer surplus equals the area
A) beneath the demand curve and above the marginal cost curve.
B) above the demand curve and beneath the marginal cost curve.
C) below the marginal cost curve.
D) above the demand curve.
A
You might also like to view...
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Keynes's model of the demand for money suggests that velocity is ________ related to ________
A) positively; interest rates B) negatively; interest rates C) positively; bond values D) positively; stock prices
Refer to Figure 8.1. The profit-maximizing output is
A) 30. B) 54. C) 60. D) 67. E) 79.
If a government regulation states that fluorocarbon emissions should be abated by 75 percent but the optimal level of pollution abatement is 85 percent, which of the following must be true?
a. The free market will not reduce pollution by less than 85 percent. b. The free market will accomplish 85 percent abatement, but it will be inefficient. c. If only 75 percent of the pollution is abated, the society will be better off than if 85 percent had been abated. d. If only 75 percent of the pollution is abated, the society will be worse off than if 85 percent had been abated. e. If 75 percent of the pollution is abated, then in the next period the government should set the abatement level at 95 percent.