Suppose a market has only one seller and only one buyer of a good. The buyer has a reservation value of $25 and the seller has a reservation value of $15. The market price of the good is determined at $20
If they trade, the social surplus will be ________. A) $10
B) $20
C) $40
D) $60
A
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A.W. Phillips' study of unemployment and inflation in the United Kingdom specifically looked at the empirical relationship between the unemployment rate and the
A) rate of change in prices. B) rate of change in nominal wages. C) rate of change in real wages. D) level of nominal wages.
In a competitive industry buffeted by demand supply shocks, prices increase and decrease, but economic profits tend to revert to zero. Hence, profits are exhibiting
a. Above-average return b. Positive earnings c. Mean reversion d. None of the above
The owners of a corporation are
a. stockholders b. managers c. sole proprietors d. partners e. at risk of bankruptcy if the firm makes losses
One of the consequences of allowing wages to fall in the United States has been growing wage inequality
a. True b. False Indicate whether the statement is true or false