Markets fail to maximize total surplus when:
A. society's choices impose costs or benefits on other societies.
B. individual choices impose costs or benefits on others.
C. when all costs and benefits are received by participants in transactions.
D. producer surplus is not exactly equal to consumer surplus.
Answer: B
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A budget constraint is a straight line because:
A) the tastes and preferences of the consumer change along the constraint. B) a consumer faces a fixed price of both goods that do not change with changes in consumption. C) the opportunity cost of buying each of the goods changes along the constraint. D) a consumer has a limited money income.
In the table above, country A is producing 4 units of X and 8 units of Y and country B is producing 4 units of X and 6 units of Y. Regarding the production of good X
A) country A has an absolute advantage. B) country B has an absolute advantage. C) country A has a comparative advantage. D) country B has a comparative advantage.
If the price of good A falls, it will: a. increase a consumer's total utility from the consumption of that good
b. increase a consumer's marginal utility from consuming the last unit of that good. c. decrease a consumer's marginal utility from consuming the last unit of that good. d. do both (a) and (c).
Resource X is necessary to the production of good Y. If the price of resource X rises, the _____________ curve for good Y will shift ____________ resulting in a(n) _____________ in the equilibrium price of Y and a(n) ____________ in the equilibrium quantity of Y
A) supply; rightward; decrease; increase. B) demand; leftward; decrease; decrease C) demand; rightward; increase; increase D) supply; leftward; increase; decrease E) supply; leftward; increase; increase