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.
B. A + B + C + E + F + G + I.
C. A + B + C + E + F.
D. A + B + C + D.
Answer: C
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What are the factors that can shift the short-run aggregate supply curve but not the long-run aggregate supply curve? Explain your answer
What will be an ideal response?
In its effort to maximize economic profit, a firm characterized as a price setter must determine:
A) only the price it should charge. B) only the quantity it should produce. C) both the price it should charge and the quantity it should produce. D) neither the price it should charge and the quantity it should produce as these are both determined by forces beyond the firm's control.
The difference between a free trade area and a customs union is that
a. countries of a free trade area set their own tariff policy with respect to members of the area while countries of a customs union have a uniform tariff policy withrespect to members of the union b. governments receive custom duties (income) from all trade within the customs unioncountries while the governments of a free trade area don't c. free trade area countries engage in reciprocity while countries of a customs unioncan, but need not engage in reciprocity d. countries of a free trade area set their own tariff policy with respect to nonmembersof the area while countries of a customs union have a uniform tariff policy withrespect to nonmembers of the union e. free trade area countries don't share a common border, such as Canada and Mexico,while custom union countries do
When a firm is hiring the optimal amount of labor, the change in total labor cost divided by the change in labor employed is equal to
a. one b. the wage rate c. the number of firms employing labor d. the change in total revenue e. the price of the good