Producer surplus is equal to
A) the area under the supply curve.
B) the difference between price and average cost for all units sold.
C) the difference between price and marginal cost for all units sold.
D) the firm's profit when fixed costs exist.
C
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One problem with using monetary policy to address "bubbles" in asset markets is that:
A. reducing the real interest rate to deal with the bubble could lead to inflation. B. the Federal Reserve is better than financial-market professionals at identifying bubbles. C. monetary policy is not a very good tool for addressing the problem of inappropriately high asset prices. D. the Federal Reserve is not interested in stabilizing output.
According to this Application, lower oil prices should ________ aggregate ________
A) increase; demand B) not change; demand C) decrease; demand D) decrease; supply
The tendency for nominal interest rates to be high when inflation is high and low when inflation is low is known as:
A. deflating. B. shoe leather costs. C. the Fisher effect. D. the consumer price index.
Price elasticity of supply is always
A) positive because of the law of supply.
B) negative because of the law of supply.
C) positive because of diminishing marginal utility.
D) negative because percentages can only be negative.