Refer to Figure 7-11. If the demand curve is D and the supply curve shifts from S’ to S, what is the change in producer surplus?
a. Producer surplus increases by $625
b. Producer surplus increases by $1875
c. Producer surplus decreases by $625
d. Producer surplus decreases by $1875
Answer: b. Producer surplus increases by $1875
You might also like to view...
If national saving decreases,
A) the sum of domestic investment and foreign investment must increase. B) the sum of domestic investment and net exports must increase. C) the sum of domestic investment and foreign investment must decrease. D) foreign investment must increase to cover the loss.
A tax equal to the external cost on firms that emit pollutants would: a. provide firms with the incentive to increase the level of activity creating the pollution
b. provide firms with the incentive to decrease the level of activity creating the pollution. c. provide firms with little incentive to search for less environmentally damaging production methods. d. not reduce pollution levels at all.
The regulation of the prices charged by insurance companies is known as
A) the Federal Register. B) social regulation. C) the market share test. D) economic regulation.
In a competitive market with identical firms,
a. an increase in demand in the short run will result in a new price above the minimum of average total cost, allowing firms to earn a positive economic profit in both the short run and the long run. b. firms cannot earn positive economic profit in either the short run or long run. c. firms can earn positive economic profit in the long run if the long-run market supply curve is upward sloping. d. free entry and exit into the market requires that firms earn zero economic profit in the long run even though they may be able to earn positive economic profit in the short run.