In the above figure, when the efficient quantity of gloves is produced, the total producer surplus is
A) $3,000.
B) $15,000.
C) $22,500.
D) $45,000.
C
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Suppose there are two market structures: A and B. Market A is characterized by free entry and exit of firms and firms under this structure face a horizontal demand curve. Market B has only one seller. Identify the market structures
Comment on the pricing mechanism, long-run profitability, and social surplus under both market structures.
If the interest rate was 5 percent and an investment project was expected to yield net revenue of $3,000 per year (to be received at year end) for each of the next three years, profit-maximizing decision makers would undertake the investment only as long as it cost less than
a. $7,461. b. $8,170. c. $8,652. d. $9,000.
Within the AD/AS model, if consumers increase their savings and cut back on their spending, the
a. natural rate of unemployment will increase. b. real interest rate will decrease and, thereby, cushion the reduction in consumption spending. c. real interest rate will increase because of the higher rate of saving. d. long-run aggregate supply will decrease to restore equilibrium.
What are the two basic types of economies?