Caroline sharpens knives in her spare time for extra income. Buyers of her service are willing to pay $2.95 per knife for as many knives as Caroline is willing to sharpen. On a particular day, she is willing to sharpen the first knife for $2.00, the second knife for $2.25, the third knife for $2.75, and the fourth knife for $3.50 . Assume Caroline is rational in deciding how many knives to
sharpen. Her producer surplus is
a. $0.95.
b. $1.15.
c. $1.30.
d. $1.85.
d
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Help in financing our federal budget deficit comes from a ________ amount of net exports, which is called ________
A) negative, net foreign investment B) negative, foreign borrowing C) positive, net foreign investment D) positive, foreign borrowing
Which of the following is true in the short run? a. The aggregate supply curve is horizontal
b. The aggregate supply curve is vertical. c. Per-unit costs do not increase as much as output prices when the price level rises. d. An increase in price per unit results in a decrease in profit per unit. e. Firms' total costs of production decrease as output expands beyond the potential level.
When price exceeds average variable cost for a firm, it is possible that: a. it is earning an economic profit. b. it is breaking even
c. it is suffering an economic loss. d. any of the above is true.
Suppose that the government imposes an excise tax on widgets. The portion of the tax borne by the buyer of widgets depends upon
a. elasticity of demand. b. income of buyers. c. size of the tax that is imposed. d. cross elasticity of demand between widgets and floogles.