Allocative efficiency occurs only at that output where:
A. marginal benefit exceeds marginal cost by the greatest amount.
B. consumer surplus exceeds producer surplus by the greatest amount.
C. the combined amounts of consumer surplus and producer surplus are maximized.
D. the areas of consumer and producer surplus are equal.
Answer: C
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What will be an ideal response?
Suppose that when the price of strawberries decreases, Simone increases her purchase of whipped cream. To Simone
A) strawberries and whipped cream are normal goods. B) strawberries and whipped cream are complements. C) strawberries are a normal good and whipped cream is an inferior good. D) strawberries and whipped cream and substitutes.
In peak-load pricing, once capacity is reached, the firm's short-run marginal cost curve becomes ________.
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Which of the following explains the Phillips curve trade-off?
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