What is consumer surplus and how is it calculated?
What will be an ideal response?
Consumer surplus is the difference between the amount a consumer is willing to pay and the price they actually pay for a product. It is calculated by subtracting market price from willingness to pay or the area between the demand curve and the market price.
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Assuming all else equal, if an airline company decides to purchase new planes, it is likely to cause:
A) a downward movement along its credit demand curve. B) its credit demand curve to shift to the right. C) an upward movement along its credit demand curve. D) its credit demand curve to shift to the left.
The figure above shows the demand curve, marginal revenue curve, and marginal cost curve. The deadweight loss when the market has a monopoly producer is
A) ace. B) abf. C) bcd. D) bcef. E) acd.
The table above shows four methods for producing 10 computer desks a day. If the cost of a worker is $100 a day and the cost of capital is $100 a day, the method that is economically efficient is ________
A) C B) B C) B, C, or D D) A
Economists using marginal utility theory assume that consumers' objectives are to
A) maximize their total utility. B) maximize their marginal utility. C) maximize their income. D) none of the above.