Consumer surplus:
a. is minimized in market equilibrium.
b. measures the value between the actual selling price of a product and the price at which sellers are willing to sell the product.
c. measures the value between the price consumers are willing to pay for a product and the price they actually pay.
d. measures the price at which sellers extract excess profits from consumers.
c
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The opportunity cost of holding money instead of an interest earning asset is the
A) inflation rate minus the real interest rate. B) inflation rate. C) real interest rate. D) nominal interest rate. E) inflation rate minus the nominal interest rate.
Assume the demand for a good is price inelastic, i.e., ed < 1 (in absolute value). This means that if price decreases by 50 percent, quantity demanded will:
A) increase by more than 50 percent. B) decrease by more than 50 percent. C) increase by less than 50 percent. D) decrease by less than 50 percent.
From the classical perspective, a decrease in output during a recession is a result of
A) firms voluntarily supplying fewer goods and services in the marketplace. B) a greater quantity of goods and services supplied than is the quantity demanded for these goods and services. C) the decrease in the overall level of production due to those firms which were forced to shut down. D) the decline in availability of factors of production which naturally occurs at the onset of a recession.
The profit-maximizing price and quantity established by the unregulated monopolist in the above figure are
A) Q1 units of output and a price of P5. B) Q3 units of output and a price of P3. C) Q1 units of output and a price of P1. D) Q4 units of output and a price of P4.