Suppose Alice sells a good for $60 on eBay. If the producer surplus from the sale is $25, Alice's cost of the good must have been:
A. $35.
B. $25.
C. $60.
D. $85.
Answer: A
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In the figure above, the demand is elastic in the range of prices between
A) $3.50 and $4.50 per cup B) $2.50 and $3.50 per cup C) $1.00 and $2.00 per cup D) $2.00 and $4.00 per cup E) $1.75 and $2.75 per cup
Assume the marginal propensity to consume (MPC) is 0.75 and the government cuts taxes by $250 billion. The aggregate demand curve will shift to the:
a. right by $1,000 billion. b. right by $750 billion. c. left by $1,000 billion. d. left by $750 billion.
A subsidy equal to the marginal private benefit of a good can be used to make a market with a positive externality efficient
a. True b. False
If the U.S. price level is increasing by 3 percent annually and the Japanese price level is increasing by 1 percent annually, then according to purchasing-power parity, by about what percent would the nominal exchange rate be changing?
a. decreasing by 4 percent b. decreasing by 2 percent c. increasing by 4 percent d. increasing by 2 percent