Use the figure below to answer the following question.
If the output level is Q2, then there will be
A. greater marginal benefits than marginal costs of the product.
B. minimum net consumer surplus.
C. allocative efficiency.
D. maximum deadweight losses.
Answer: C
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If the relative market price of producing cotton is more than the opportunity cost of producing it in the South,
(a) the market price of cotton will fall in the long run. (b) producers will increase the supply of cotton in the long run. (c) resources will flow away from the production of cotton, causing the supply of it to decline with the passage of time. (d) the situation will remain unchanged as long as supply and demand remain in balance.
All else equal, a decrease in demand will cause an increase in producer surplus
a. True b. False Indicate whether the statement is true or false
An adverse supply shock generally decreases the price level and real GDP.
a. true b. false
To be able to engage in profit-maximizing price searching, a monopoly firm must be able to
A. induce the entry of other firms into the market for its product. B. always earn zero economic profits. C. prevent the entry of other firms into the market for its product. D. avoid earning negative economic profits in the short run.