For an economist to say that too much of the good is produced, what must be true?
A. The consumer surplus must be smaller than optimal.
B. The consumer surplus plus the producer surplus must be smaller than it could be.
C. The producer surplus must be smaller than optimal.
D. The consumer surplus must be larger than optimal.
Answer: B
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If the economy experiences a(n) ________, inflation will rise and real GDP will fall
A) negative supply shock B) decrease in aggregate demand C) increase in short-run aggregate supply D) positive supply shock
The demand for a resource is derived from the consumer demand for the good or service produced by the resource
a. True b. False
What arguments have been advanced in defense of price discrimination?
What will be an ideal response?
When employees are offered incentives to find new customers, but the aggregate economy is so weak (in recession) that the firm loses consumers, then the incentive plan:
A. must be adhered to no matter what. B. suffers from the problems of external risks that employees cannot overcome. C. suffers from the problem of diminishing reservation utility. D. must be adjusted to make employees work harder in difficult times.