The total of producer and consumer surplus is maximized when there is underproduction.
Answer the following statement true (T) or false (F)
False
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Refer to Table 12-2. How many pounds of apples should Margie sell to maximize her profit?
A) 300 pounds B) 400 pounds C) This cannot be determined without knowing Margie's total or marginal production costs. D) This can be determined only when all of the values for market price, total revenue, average revenue and marginal revenue are given.
The water-diamond paradox discussed in the text implies that
a. water, unlike diamonds, is not subject to the law of diminishing marginal utility b. the less abundant a good, the lower is its marginal utility although its total utility may still be relatively high c. the more abundant a good, the lower is its marginal utility although its total utility may still be relatively high d. people would trade water for diamonds, a useful for a useless good e. the price of water is higher than the price of diamonds
Unemployment
a) falls when households save a larger fraction of their income. b) moves in the opposite direction as real GDP. c) rises during expansions. d) decreases as production falls.
Exhibit 10-8 Aggregate demand and supply
In Exhibit 10-8, if aggregate demand shifts from AD1 to AD2,
A. real GDP will increase from $3.0 to $7.0, and the price level will remain the same. B. real GDP will increase from $3.0 to $4.0, and the price level will remain the same. C. real GDP and the price level will both remain the same. D. real GDP will increase from $3.0 to $4.0, and the price level will increase from 100 to 140.