Suppose Brent, Callie, and Danielle each purchase a particular type of electric pencil sharpener at a price of $20 . Brent's willingness to pay was $22, Callie's willingness to pay was $25, and Danielle's willingness to pay was $30 . Which of the following statements is correct?
a. Had the price of the pencil sharpener been $24 rather than $20, only Danielle would have been a buyer.
b. Brent's consumer surplus is the smallest of the three individual consumer surpluses.
c. For the three individuals together, consumer surplus amounts to $60.
d. The fact that all three individuals paid $20 for the same type of pencil sharpener indicates that each one placed the same value on that pencil sharpener.
b
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A cartel will break down more easily if
A) there are only a few members. B) industry demand is very stable. C) market prices can be observed easily. D) there are many entrants in the industry.
Suppose that the federal government had a budget deficit of $100 billion in year 1 and $90 billion in year 2, but that it experiences budget surpluses of $40 billion in year 3 and $30 billion in year 4. Also assume that the government uses any budget surpluses to pay down the public debt. At the end of these four years, the Federal government's public debt would have
A. decreased by $120 billion. B. increased by $120 billion. C. increased by $260 billion. D. decreased by $260 billion.
If entry barriers into a monopolized market are kept low,
A. Government failure exists. B. A market is contestable. C. Market power increases. D. A duopoly will be created.
Market signals are
A. used to differentiate those who will drive equally carefully whether or not they have auto insurance from those who drive less carefully when they have insurance. B. used to distinguish between high and low quality and help correct the adverse selection problem. C. actions taken by buyers and sellers to communicate quality in the presence of perfect information. D. only strong if obtaining the signal is more costly for individuals with valued traits than for those with non-valued traits.