Total producer surplus is measured as the area:
A. above the supply curve.
B. between the demand curve and the supply curve.
C. beneath the demand curve and above the market price.
D. beneath the market price and above the supply curve.
Answer: D
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Four stores have a problem with theft and security is a public good. Let S stand for the number of person-hours of security patrols per week. The marginal benefit of security patrols to each of the stores is given by the formula MB = 200 - 2S. Patrols cost $20 per hour. Which of the following gives the marginal social benefit function?
A. MSB = 50 - 0.5S B. MSB = 800 - 8S C. MSB = 800 - 2S D. MSB = 196 - 2S
Since the 1950s, nonresidential investment has
A. declined. B. not changed. C. decreased substantially. D. changed as we invest more in software and computers than buildings.
To avoid trade restrictions, a U.S. firm moves its final production process to Ireland and then ships the final products to the United Kingdom. This is an example of
A. trade deflection. B. trade diversion. C. protectionism. D. rules of origin.
Demand for one item goes down when the price of another item goes up. These items must be
A. substitutes. B. inferior goods. C. normal goods. D. complements.