Refer to the graph shown. Area C represents:
A. the total loss of surplus by consumers resulting from a monopoly.
B. the loss of surplus by producers resulting from a monopoly.
C. the cost to society of increasing output from Qm to Qc.
D. consumer surplus redistributed to the monopolist.
Answer: D
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Any point inside a production possibilities curve indicates:
A) unemployment and/or inefficiency. B) that the law of increasing opportunity costs is no longer valid. C) that society doesn't want more of either good. D) that economic growth is no longer possible.
In the diagram above, Cheri's budget line shifts outward from AB to CD. Which statement below is consistent with this shift?
A. Her income is reduced; no change in either price. B. Both the price of good 1 and Cheri's income increase; there is no change in the price of good C. Both prices double; her income doubles. D. Both prices are reduced by 50 percent; her income is reduced by less than 50 percent.
Assume the reserve ratio is 25 percent and Federal Reserve Banks buy $4 million of U.S. securities from the public, which deposits this amount into checking accounts. As a result of these transactions, the supply of money is:
A. not directly affected, but the money-creating potential of the commercial banking system is increased by $12 million. B. directly increased by $4 million and the money-creating potential of the commercial banking system is increased by an additional $16 million. C. directly reduced by $4 million and the money-creating potential of the commercial banking system is decreased by an additional $12 million. D. directly increased by $4 million and the money-creating potential of the commercial banking system is increased by an additional $12 million.
Changes in domestic and foreign income result in:
A) movements along the demand and supply curves of the foreign exchange market. B) shifts in the demand and supply curves of the foreign exchange market. C) all of the above. D) none of the above.