Total surplus is
a. equal to consumer surplus minus producer surplus.
b. equal to the total value to buyers minus the total cost to sellers.
c. equal to consumers' willingness to pay plus producers' cost.
d. greater than the sum of consumer surplus plus producer surplus.
b
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The slope of the budget line is equal to the ratio of:
a. marginal utilities. b. money income to the price of the good on the horizontal axis. c. money income to the price of the good on the vertical axis. d. price of the good on the horizontal axis to the price of the good on the vertical axis.
The truth of the MPP=MRP condition has been implicitly accepted by most businesses while not explicitly recognizing its legitimacy
Indicate whether the statement is true or false
Suppose that the absolute price elasticity for cookies equals 0.8. We could then say that the demand for cookies is
A) elastic. B) inelastic. C) unit-elastic. D) perfectly elastic.
Based on your understanding of your roommate's preferences, you predict that he will select the spaghetti for his lunch at the cafeteria, but instead he chooses the gyros. How do you describe this event in terms of economic theory?
A) Your roommate is irrational. B) Your roommate does not know what is in his own best interests. C) You roommate does not know his own preferences as well as you do. D) You constructed a model that made a prediction, and the prediction was refuted.