If a firm charges a price equal to the marginal cost-the competitive solution-then the gains from trade are
A. all in the form of producer surplus.
B. all in the form of consumer surplus.
C. split between producer and consumer surplus.
D. split between shareholders and producers.
Answer: B
You might also like to view...
To fully analyze the effects of a tariff on imports of tomatoes, an economist needs
a. only to know the supply and demand curves in the market for tomatoes. b. only to know about supply and demand in the market for tomatoes and in markets for other products tomato farmers grow. c. to use general equilibrium analysis. d. to use a production possibilities curve.
John has just tried on the most comfortable pair of pants that he has ever known. The pants are a(n)
A) experience good. B) credence good. C) logo good. D) information good.
If AVC is $10 when P = MC, a firm
A) will have positive economic profits if price is greater than $10. B) is producing too little output. C) should shut down if price is less than $10. D) is experiencing economies of scale.
Land of Many Lakes (LML) sells butter to a broker in Albert Lea, Minnesota. Because the market for butter is generally considered to be competitive, LML does not
a. choose the quantity of butter to produce. b. set marginal revenue equal to marginal cost to maximize profit. c. have any fixed costs of production. d. choose the price at which it sells its butter.