If the market price rises from P0 to P2 in the above figure, then there is a
A. surplus equal to the distance Q0, Q2.
B. shortage equal to the distance Q0, Q2.
C. shortage equal to the distance Q1, Q2.
D. surplus equal to the distance Q1, Q2.
Answer: D
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In the presence of a negative externality
a. the market solution is efficient, but the market price is too high b. the market price is efficient, but the corresponding quantity is inefficient c. the market solution results in too little output being produced d. the efficient outcome is determined where the marginal social cost and market demand curves intersect e. the efficient outcome is determined where the marginal cost and market supply curves intersect
Total physical product is maximized if marginal physical product is zero
a. True b. False Indicate whether the statement is true or false
Two identical firms compete as a Cournot duopoly. The demand they face is P = 100 ? 2Q. The cost function for each firm is C(Q) = 4Q. The equilibrium output of each firm is:
A. 32. B. 36. C. 16. D. 8.
What is measured on the horizontal axis on the aggregate demand graph?
A. unemployment B. nominal income C. the price level D. real GDP per year