Refer to Figure 4-6. What area represents producer surplus at the equilibrium price of P1?
A) A + B + C + D + E B) A + B + D C) D + E D) D + E + G + H
C
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Using the Lorenz curve, the degree of income inequality is measured by
a. The line connecting all points for which a given percentage of families receives exactly the cumulative percentage of income b. the distance of the Lorenz curve from the line of perfect equality c. the flat diagonal line that applies to a perfectly elastic demand curve d. the number of times the Lorenz curve crosses the line of perfect equality e. is derived by dividing the number of people below the poverty line by the total population
Insurance companies work toward reducing moral hazard in health insurance by requiring clients to:
a. sign a contract stating they will not engage in risky behavior. b. return any unspent moneys at the end of the year. c. be placed in an adverse selection group if they have more than one claim in a 12-month period. d. reach a deductible threshold before insurance will pay anything.
If a government enacts a price floor on agricultural products to protect wheat farmers, the result is likely going to be
a. an increase in price with a surplus of wheat. b. an increase in price with a shortage of wheat. c. a decrease in price with a surplus of wheat. d. a decrease in price with a shortage of wheat.
Mathematically, elasticity is the percentage change in _____ brought about by a percentage change in _______.
Fill in the blank(s) with the appropriate word(s).