Jenn is willing to pay $75 for a purse and the purse's price is $60. What is Jenn's consumer surplus on this purse?
What will be an ideal response?
The consumer surplus equals the difference between the marginal benefit of the good and the price actually paid. Jenn is willing to pay $75 for the purse, so its marginal benefit to her is $75. However, she only must pay $60, so Jenn has a consumer surplus of $75 - $60 = $15.
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In the Cournot model, each firm assumes that its rival will ____ its output when the firm adjusts its own output. Which word best completes the sentence?
a. increase b. not change c. decrease d. adjust
When economists talk about a balance of payments "deficit," they refer to:
a. a net balance in the balance of payments that is less than zero. b. a condition in which total credits exceed total debits in the balance of payments. c. a deficit in one of the sub-accounts of the balance of payments. d. a disequilibrium in the foreign exchange market. e. a net loss in the trade of international goods and services.
Exhibit 9-1 A monopolistic competitive firm
?
If all firms in the industry are the same as the monopolistic competitive firm shown in this Exhibit 9-1, firms in the long run will:
A. leave the industry. B. earn positive economic profits. C. experience less competition because firms will exit the industry. D. experience competition from new firms that enter the industry.