All of the following statements about the free market equilibrium output are equivalent except:
a. Total surplus is maximized.
b. There is zero dead-weight loss.
c. There are no allocations that a Pareto preferred.
d. There is positive dead-weight loss.
d. There is positive dead-weight loss.
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George and Michael can gain from exchange
A) unless one has an absolute advantage in all goods. B) if each specializes in the production of the good for which he has the higher opportunity cost. C) if each specializes in the production of the good for which he has the lower opportunity cost. D) unless they have different opportunity costs.
Refer to Figure 10-9. If the consumer has $240 to spend on DVDs and CDs, what is the price of a CD if the budget constraint is BC2?
A) $8 B) $10 C) $20 D) $40
Scarcity is illustrated graphically by a production possibilities frontier.
Indicate whether the statement is true or false.
When economists say that the supply for a product has decreased, they mean that the