Refer to Figure 4-9. What area represents consumer surplus after the imposition of the price floor?
A) A + B B) A + B + E C) A + B + E + F D) A
D
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The figure above shows the market for pants. If the government subsidizes the production of pants so that production expands from 6 million pairs to 7 million pairs,
A) there would be no deadweight loss. B) the government's policy would have no effect on the sum of consumer surplus and producer surplus. C) a deadweight loss would result. D) the government's policy would increase the sum of consumer surplus and producer surplus. E) production would be even more efficient than if 6 million pairs of pants are produced because more is always better than less.
What are some of the potential obstacles that can lead to market failure by preventing a market from reaching the efficient outcome? Briefly define each obstacle
What will be an ideal response?
Which of the following equations defines marginal revenue product?
A. MRP = P times Q. B. MRP = total cost. C. MRP = total revenue minus total cost. D. MRP = MPP times price of the product.
Suppose an oligopolistic producer assumes its rivals will ignore a price increase but match a price cut. In this case the firm perceives its:
A. demand curve as being of unit elasticity throughout. B. supply curve as kinked, being steeper below the going price than above. C. demand curve as kinked, being steeper below the going price than above. D. demand curve as kinked, being steeper above the going price than below.