Consumer surplus does not exist because some consumers cannot afford to purchase the product at all.
Answer the following statement true (T) or false (F)
False
Consumer surplus is defined as the benefit some buyers get when they are actually willing to pay more for a good than the actual price. Remember that demand is the willingness and ability of consumers to purchase a good; there are individuals who cannot afford a good at the market price, but this does not negate the fact that some buyers still enjoy a surplus.
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The political business cycle theory predicts that
A) the Fed acts to promote the interests of the general public. B) the Fed acts to stimulate economic activity before an election. C) the President's appointments to the Board of Governors will usually be politicians. D) political factors over which the Fed has no control are most important in explaining the business cycle.
Which of the following represents the total value of all final goods and services produced in a given period, adjusted for inflation?
a. gross domestic product (GDP) b. gross domestic product (GDP) growth rate c. rate of inflation d. real gross domestic product (RGDP)
What will happen when there is a rightward shift in the demand curve?
A. The product price will instantaneously adjust downward. B. A new, higher price is not instantaneously achieved, but the price will rise over time. C. Producers will decrease the product price. D. Product prices do not change in this situation.
The incentive for new firms to enter into a perfectly competitive market is primarily the:
A) large number of existing firms in the market. B) positive profits earned by the existing firms in the market. C) high level of government intervention in the market. D) large number of buyers in the market.