Which of the following best defines consumer surplus?
a. the amount that individuals actually paid, minus the amount that they would have been willing to pay
b. the amount that a seller is paid for a good minus the seller’s actual cost
c. the amount that individuals would have been willing to pay, minus the amount that they actually paid
d. when it is impossible to improve the situation of one party without imposing a cost on another
c. the amount that individuals would have been willing to pay, minus the amount that they actually paid
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After a firm makes both short and long run adjustments in its production plan following a reduction in the wage,
A. the marginal product of labor will be higher. B. the marginal product of labor will be lower. C. the marginal product of capital will be unchanged. D. the marginal product of capital may be higher or lower depending on the degree of substitutability between capital and labor. E. (a) and (c) F. (a) and (d) G. (b) and (c) H. (b) and (d)
Managers undertake an investment only if
a. Marginal revenue is greater than zero b. Marginal costs is less than marginal revenue c. Marginal revenue is greater than marginal costs d. Investment decisions do not depend on marginal analysis
The absolute value of the slope of the production possibilities curve at any point:
A) gives the price of the good on the vertical axis that must be given up to attain an additional unit of the good on the horizontal axis. B) is found by dividing the horizontal change by a vertical change. C) gives the quantity of the good on the vertical axis that must be given up to produce an additional unit of the good on the horizontal axis. D) gives the price of the good on the horizontal axis relative to the price of the good on the vertical axis.
If the economy is in a recession, which point in the graph shown would likely represent this?
A. E1 B. E2 C. E3 D. E4