In a competitive market equilibrium
A) marginal benefit and marginal cost are maximized.
B) the marginal benefit equals the marginal cost of the last unit sold.
C) total consumer surplus equals total producer surplus.
D) consumers and producers benefit equally.
B
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Which of the following influences people's buying plans and does not shift the demand curve?
A) the price of the good B) the prices of related goods C) income D) preferences
The Wong family consumes 3 pounds of fish and 5 pounds of chicken per month. The price of fish is $8 per pound and chicken is $4 per pound
a. What is the amount of income allocated to fish and chicken consumption? b. What is the price ratio (the price of fish relative to the price of chicken)? c. Explain the meaning of the price ratio you computed. d. If the Wongs maximize utility, what must the ratio of the marginal utility of fish to the marginal utility of chicken be equal to? e. If the price of chicken rises, will the Wong family consume more chicken, less chicken, or the same amount of chicken? Explain your answer using the rule of equal marginal utility per dollar.
Assume a money multiplier of 3. If the Treasury finances a $30 million expenditure by selling securities to the Fed, the effect of this transaction on the money supply is that it will
A) remain unchanged. B) rise by $3 million. C) rise by $30 million. D) rise by $90 million.