The sum of all the net benefits received by the parties to a transaction is called
A) consumer surplus.
B) producer surplus.
C) cooperative surplus.
D) deadweight loss.
C
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Wendell just read an article that says scientists have proven that processed cheese food increases brain power. We would expect Wendell's demand for processed cheese food to:
A. increase and shift to the right. B. increase and shift to the left. C. decrease and shift to the right. D. decrease and shift to the left.
Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to
a. increase. b. remain unchanged. c. decrease by less than 20 percent. d. decrease by more than 20 percent.
The classical school
A. was the dominant school of economic thought after the Great Depression. B. advocated laissez-faire. C. was mainly concerned with aggregate demand. D. believed that about half of the money saved would be invested.
If the cost of driving during specific times of the day increases, people will drive less during those times. This supports the basic economic notion that:
A. supply equals demand. B. people respond to incentives. C. marginal returns will diminish. D. people are irrational.