The following diagram shows a market equilibrium. D is the demand curve for a good and S is the supply curve of the good. The consumer surplus at a price of $b is given by the area:
a. ?below the curve D and above the market price of $b.
b. ?above the curve D.
c. ?below the curve S.
d. ?below the curve D and above the curve S.
e. ?below the curve D and above the market price of $d.
Ans: a. ?below the curve D and above the market price of $b.
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Economic theory assumes people make decisions by weighing additions to cost against additions to benefit, which can best be described as
A) additivism. B) capitalism. C) marginalism. D) opportunism. E) rationalism.
Suppose you find $1000 in your attic and decide to deposit it all into your local bank, which must hold 20% as required reserves. The deposit expansion multiplier suggests that this $1,000 "injection" of new money will, in reality, most likely
A) increase the money supply by more than $1,000. B) increase the money supply by less than $1,000. C) increase the money supply by exactly $1,000. D) increase the money supply by exactly $5,000.
Refer to Figure 16-1. What is the economically efficient output level?
A) Q1 units B) Q2 units C) Q3 units D) Q4 units
Dunston Military Academy has an annual deficit of $250,000. Its 1,000 students pay tuition of $10,000 each per year. The economics faculty has recommended solving the problem by recruiting additional athletes with $5,000 scholarships. Each additional athlete will cost the school $2,500 (equipment, etc.). Assuming the academy agrees, how many athletes are needed to eliminate the deficit?
A. Zero, the deficit cannot be eliminated by giving more scholarships. B. 25 C. 50 D. 100