The total of consumer plus producer surplus is greatest
A. when consumer surplus is maximized.
B. at the market equilibrium.
C. when producer surplus is maximized.
D. all of the above
Answer: B
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If the income tax rate is 20 percent and the tax rate on consumption expenditure is 15 percent, then the tax wedge is
A) 2 percent. B) 35 percent. C) 300 percent. D) 5 percent. E) None of the above answers is correct.
A perfectly competitive firm earns a profit when price is
A) equal to minimum average variable cost. B) above minimum average total cost. C) equal to minimum average total cost. D) equal to minimum average fixed cost.
For term life insurance, the policy holder pays
A) premiums based on current interest rates. B) a constant premium. C) premiums that vary with mortality risk. D) constantly declining premiums.
Consumers who put a high value on a service
A) are better off with perfect price discrimination. B) are better off under a single-price monopoly. C) are indifferent between perfect price discrimination and a single-price monopoly. D) incur deadweight loss under either single-price monopoly or perfect price discrimination.