The amount of money consumers pay producers is
A. the area under the demand curve from the origin to the quantity purchased.
B. the area under the demand curve but above the price line from the origin to the quantity purchased.
C. the price times the quantity or the rectangle whose height is the price and base is the quantity purchased.
D. the area under the supply curve from the origin to the quantity produced.
Answer: C
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Perfectly competitive markets are not the best at producing the goods that are desired by consumers.
Answer the following statement true (T) or false (F)
If the cross-price elasticity of two goods is 0.25, then we know that these goods are:
A. substitutes because their cross-price elasticity is greater than zero. B. complements because their cross-price elasticity is less than 1. C. substitutes because their cross-price elasticity is less than 1. D. complements because their cross-price elasticity is greater than zero.
If the price of a good is below its equilibrium level, then
a. an excess supply will result b. quantity supplied exceeds quantity demanded c. the supply curve will shift to the right d. quantity demanded exceeds quantity supplied e. the demand curve will shift to the left
Tax as a wedge
What will be an ideal response?