Answer the following questions true (T) or false (F)
1. Producer surplus is the difference between the highest price someone is willing to pay and the price he actually pays.
2. Producer surplus is the difference between the highest price a firm is willing to accept for a product and the price it actually receives for the product.
3. The total amount of producer surplus in a market is equal to the area above the market supply curve and below the market price.
1. FALSE
2. FALSE
3. TRUE
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An action at which it is possible to marginally increase or decrease an activity level is called:
A. an interior action. B. a boundary action. C. a marginal improvement action. D. a marginal action.
One of the reasons that Real Gross Domestic Product is not synonymous with social welfare is
A. things produced by people under 18 are not counted. B. people substitute between goods. C. it ignores the value of leisure. D. quality has remained steady.
Which of the following statements is true?
A. According to the permanent income hypothesis, a person who received a windfall of say $100,000 would spend most of it that year. B. As disposable income rises, induced consumption falls. C. The minimum amount that people will spend if disposable income is zero is called induced consumption. D. A rapid increase in the prices of residential housing results in an increase in consumption due to the wealth effect.
At a constant rate of exchange between currencies, higher inflation makes domestic goods sold abroad ________ expensive and hence, ________ short-run equilibrium output.
A. less; decreases B. more; increases C. more; decreases D. less; increases