The difference between the maximum amount consumers are willing and able to pay for each unit of a good and the amount consumers actually do pay is called:
a. consumer surplus.
b. marginal benefit.
c. marginal cost.
d. productive efficiency.
a
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In the short run, a fiscal policy action that results in a reduction in the size of the budget deficit will cause
A) a reduction in real GDP with falling prices if the economy was below or at full employment. B) an inflationary gap if the economy was initially operating below full employment. C) an inflationary gap if the economy was initially operating at full employment. D) an increase in real GDP with stable prices if the economy was below full employment.
Why do people hold money in the classical model?
What will be an ideal response?
A competitive equilibrium is Pareto efficient because at the competitive equilibrium,
A) prices have been allowed to adjust. B) there are no further gains from trade. C) the final outcome is different from the original inefficient endowment. D) all members of society can be made better off.
Wendy's restaurants must decide whether to grow their own potatoes for French fries or buy them. If they buy rather than grow, then they have opted to
a. integrate horizontally b. allow market prices to guide resource allocation c. integrate vertically d. allow hierarchical control to guide resource allocation e. form an authority relation