The total amount of producer surplus in a market is equal to
A) the difference between quantity supplied and quantity demanded.
B) the area above the market supply curve and below the market price.
C) the area above the market supply curve.
D) the area between the demand curve and the supply curve below the market price.
Answer: B
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The above figure shows the market for labor. The employer is a monopsony. If a minimum wage is set at $10 per hour, which of the following will occur?
A) The firm will pay $5 per hour. B) The firm will pay $10 per hour. C) The firm will pay $15 per hour. D) The firm will hire less than 400 hours of labor.
Which of the following people is most likely to be structurally unemployed?
a. Brendan left his job as a short-order cook in New Jersey to become a short-order cook in Madrid, New Mexico. He was unemployed for six weeks during the transition. b. Mildred quit her job after giving birth to a child. c. Clem, a skilled corset maker, lost his job when his factory shut down due to a permanent reduction in the demand for corsets. d. Danielle lost her job when the electronics assembly plant was shut down temporarily due to low product sales in a slumping economy.
Suppose the supply of diamonds is relatively inelastic. A tax on diamonds would generate a
a. large DWL and the burden of a tax would fall on the buyer of diamonds. b. small DWL and the burden of a tax would fall on the buyer of diamonds. c. large DWL and the burden of a tax would fall on the seller of diamonds. d. small DWL and the burden of a tax would fall on the seller of diamonds.
The production possibility frontier is a graph that shows
A. all the combinations of goods and services that are consumed over time if all of society's resources are used efficiently. B. the amount of goods and services consumed at various average price levels. C. all the combinations of goods and services that can be produced if all of society's resources are used efficiently. D. the rate at which an economy's output will grow over time if all resources are used efficiently.