Assume the market is in equilibrium in the graph shown at demand D and supply S1 (at a quantity of 5). If the supply curve shifts to S2, and a new equilibrium is reached (at a quantity of 7), which of the following is true?
A. Total surplus decreases by $15.50.
B. Total surplus increases by $12.50.
C. Total surplus decreases by $12.50.
D. Total surplus increases by $15.50.
Answer: D
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Refer to the scenario above. What is the sum of the payoffs to the firms if both the firms choose Strategy X?
A) 6 B) 0 C) 1 D) -1
In a perfectly competitive market, because an individual seller tends to sell only a fraction of the total amount of the good produced:
A) he can independently determine the market price. B) he can charge prices above the equilibrium price. C) his individual choices do not affect market outcomes. D) he always earns positive profit.
When a price shock has occurred, inflation returns to its pre-shock rate ________
A) in the period following the price shock B) in the period when output has returned to its pre-shock rate C) once the output gap has returned to zero D) only in the long run E) none of the above
_____ is an example of a black market activity
a. Purchasing weapons in an alley b. Purchasing cars from an authorized dealer c. Purchasing furniture from a shop d. Purchasing drugs from a pharmacy