Assume the market price for lemon grass is $4.00 per pound, but most buyers are willing to pay more than the market price. At the market price of $4.00, the quantity of lemon grass demanded is 1,500 pounds per month, and quantity demanded does not reach
zero until the price reaches $30.00 per pound. Construct a graph showing this data, calculate the total consumer surplus in the market for lemon grass, and show the consumer surplus on the graph. Your demand curve should be a straight line.
What will be an ideal response?
The total consumer surplus is (1/2 × $26 × 1,500 ) = $19,500.
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The table above gives the demand schedule for water bottled by Wanda's Healthy Waters. Wanda's marginal cost is a constant $4 a bottle and has no fixed cost. Wanda's makes an economic profit of ________ a day
A) $0 B) $24 C) $36 D) $60
Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S2 (point B)
If there is an increase in number of companies producing motorcycles and a decrease in income (assume motorcycles are a normal good), the equilibrium could move to which point? A) A B) B C) C D) E
In 2008, several banks had a:
A. solvency problem, and the Fed kept them all from going bankrupt. B. confidence problem, and would not lend enough to keep from going bankrupt. C. reserve problem, and did not have enough funds on hand to lend to keep from going bankrupt. D. solvency problem, and eventually went bankrupt as a result.
An accounting identity is
A. special drawing rights. B. when the balance of payments is running a surplus or deficits. C. when the balance of trade is in surplus or deficit. D. an expression of values that are equivalent by definition.