What consumer surplus is received by someone whose willingness to pay is $35 below the market price of a good?
A. $35
B. ($35 x P*)
C. $0
D. None of these is correct.
Answer: C
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The elasticity of demand for a project is -1.5. This means that a 30 percent increase in the quantity of the good is caused by a
A. 20 percent increase in the price of the good. B. 2 percent increase in the price of the good. C. 20 percent decrease in the price of the good. D. 15 percent decrease in the price of the good.
The actual division of a tax between buyers and sellers in a market is the excess burden of the tax
Indicate whether the statement is true or false
A subsidy may be used as a corrective device in the case of a positive externality because it will __________ marginal private benefits and __________ demand.
A. increase; decrease B. increase; increase C. decrease; decrease D. decrease; increase
If government spending increased by $200 billion and the MPC within the economy was 0.9, what would be the total impact on real GDP?
a. $180 billion increase b. $222 billion increase c. $380 billion increase d. $2.0 trillion increase