What is meant by consumer surplus? How is it calculated?
What will be an ideal response?
Consumer surplus is the difference between the willingness to pay and the price paid for a good. It is measured as the area between the consumer's willingness to pay and the market price up to the equilibrium quantity.
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Prior to international trade, the price of good X is lower in country A than in country B. This means that we know that
A) country B has an absolute advantage in the production of product X. B) country B has a comparative advantage in the production of product X. C) country A has an absolute advantage in the production of product X. D) country A has a comparative advantage in the production of product X.
The negative slope of the aggregate demand curve is caused by:
a. the real balances effect, the interest rate effect, and the price level effect. b. the real balances effect, the money supply effect, and the net exports effect. c. the interest rate effect, the net exports effect, and the real GDP effect. d. the real balances effect, the interest rate effect, and the net exports effect. e. the real balances effect, the interest rate effect, and the net export effect.
Alice's Restaurant is a business that is struggling to make a profit. Alice, the sole proprietor, wins the state lottery and becomes a multi-millionaire. She plans to continue to operate the restaurant because she enjoys the work. As her economist friend, the best advice you could give her would be to
a. form a corporation b. bring in a partner c. open a second restaurant d. work under-the-table e. work more hours