Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question.
Prior-to-trade (autarky) total economic surplus equals areas
A. A + B + C + E + F + J + I.
B. A + B + C + D.
C. A + B + C.
D. A + B + C + E + F.
Answer: B
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With respect to consuming food and shelter, two consumers choose the same bundles and both claim to be in equilibrium. We therefore know that
A) they both have the same MRS of food for shelter. B) they both face the same prices. C) they both face the same budget lines. D) None of above.
Some people oppose deficit spending because it:
A. crowds out private investment. B. violates the cost-benefit principle. C. leads to rent seeking. D. promotes logrolling.
How can a country benefit from effectively exporting its goods?
A. Its citizens can buy cheaper goods. B. Its businesses can invest in the future. C. Its domestic spending increases. D. Its citizens have more money.
If a firm has no ability to influence the market price of its product, it:
A. will go out of business due to losses. B. is a price-maker. C. cannot maximize profit. D. has a horizontal individual demand curve.