According to the graph shown, total surplus is area:
A. A + B.
B. A + B + C.
C. B.
D. A.
Answer: A
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Use the Slutsky equation to show that a Giffen good must be an inferior good, BUT an inferior good need not be a Giffen good
What will be an ideal response?
Other things constant, if there is an increase in the demand for goods now compared to goods in the future, we would expect that the
a. real interest rate would decline. b. capital investment rate would decline. c. current rate of saving would increase. d. real interest rate would rise.
QN=81 (17792) When the consumer price index rises, the typical family
a. has to spend more dollars to maintain the same standard of living. b. can spend fewer dollars to maintain the same standard of living. c. finds that its standard of living is not affected. d. can offset the effects of rising prices by saving more.
An oligopolist faces a demand curve that is steeper at higher prices than at lower prices. Which of the following is most likely?
A. Other firms match price reductions but do not match price changes. B. The firm competes with others in the Bertrand fashion. C. The firm competes with others in the Cournot fashion. D. Other firms match price increases but do not match price reductions.