Producer surplus is equal to the area
A) under the demand curve and above the supply curve.
B) above the supply curve and below the price line.
C) under the demand curve.
D) under the supply curve.
E) under the demand curve and above the price line.
B
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The above figure shows the production possibility frontier for an economy. The point or points that are not attainable are
A) points B and C. B) points A, B, and C. C) point E. D) points A, B, C, and D. E) points A and D.
Which of the following is not an example of an institution (rules of the game)?
a. formal rules of behavior b. government takeover of private corporations c. a constitution d. informal constraints on behavior e. traditions
When a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic,
a. buyers of the good will bear most of the burden of the tax. b. sellers of the good will bear most of the burden of the tax. c. buyers and sellers will each bear 50 percent of the burden of the tax. d. both equilibrium price and quantity will increase.
Which of the following illustrates how the investment accelerator works?
a. An increase in government expenditures increases the interest rate so that the Burgerville chain of restaurants decides to build fewer new restaurants. b. An increase in government expenditures increases aggregate spending so that Burgerville finds it profitable to build more new restaurants. c. An increase in government expenditures increases the interest rate so that the demand for stocks and bonds issued by Burgerville increases. d. An increase in government expenditures decreases the interest rate so that Burgerville decides to build more new restaurants.