Assume a market that has an equilibrium price of $4. If the market price is set at $8, which of the following is true?
A. Some surplus is transferred from consumers to producers, but total surplus falls.
B. All surplus is transferred from consumers to producers, and total surplus stays the same.
C. Some surplus is transferred from producers to consumers, but total surplus falls.
D. Some surplus is transferred from consumers to producers, causing total surplus to increase.
A. Some surplus is transferred from consumers to producers, but total surplus falls.
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The above figure shows the payoff to two gasoline stations, A and B, deciding to operate in an isolated town. Suppose a $60 fee is required to enter the market. If firm A chooses its strategy first, then
A) firm A will not enter. B) neither firm will enter. C) both firms will enter. D) firm A will enter and firm B will not.
The demand for sirloin steak is probably more elastic than the demand for all meat because
A) steak is very expensive. B) people are worried about cholesterol. C) cattle raising is not very profitable. D) there are more substitutes for sirloin steak than for all meats.
Patent laws that allow the inventor to maintain monopoly rights to an invention increase the price of the product and
a. increase the profitability of inventive activities, thereby speeding up technological developments. b. increase the profitability of inventive activities, thereby slowing down technological developments. c. decrease the profitability of inventive activities, thereby speeding up technological developments. d. decrease the profitability of inventive activities, thereby slowing down technological developments.
The difference between slope and elasticity is that slope
a. is a ratio of two changes, and elasticity is a ratio of two percentage changes. b. is a ratio of two percentage changes, and elasticity is a ratio of two changes. c. measures changes in quantity demanded more accurately than elasticity. d. None of the above is correct; there is no difference between slope and elasticity.