An individual's consumer surplus is the difference between the maximum price that she or he is willing to pay and the actual price.
Answer the following statement true (T) or false (F)
True
Consumers benefit when they are willing to pay more than the actual price. That difference is called the consumer surplus.
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If we are currently at point T, we can get to point S in the long run
A. through economic growth over a period of years.
B. immediately by using resources more efficiently.
C. immediately by reducing the unemployment rate.
D. immediately through technological development.
Both the perfectly competitive firm and the monopolistically competitive firm produce at the output where marginal revenue equals marginal cost (MR = MC) but only the perfectly competitive firm achieves allocative efficiency. Explain why this is the case
What will be an ideal response?
When an increase of a firm's scale of production leads to higher average costs per unit produced, there is an increasing return to scale.
Answer the following statement true (T) or false (F)
Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall. Holding everything else constant, how would this affect the market for wheat (a substitute for corn)?
A) The demand for wheat would decrease and the equilibrium price of wheat would decrease. B) The supply of wheat would increase and the equilibrium price of wheat would decrease. C) The demand for wheat would increase because consumers could afford to buy more wheat and corn. D) The demand for wheat would decrease and the equilibrium price of wheat would increase.