Even though a perfect price discriminator can extract all of the consumer surplus, how can it be efficient?
What will be an ideal response?
Efficiency has nothing to do with who gets the surpluses; that is, efficiency has nothing to do with whether the consumer surplus (or producer surplus) is large or small. Instead, a market is efficient as long as there is no deadweight loss. Because there is no deadweight loss with perfect price discrimination, even though the amount of consumer surplus is as small as possible—zero!—and the producer surplus is as large as possible, nonetheless the market is efficient.
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Suppose that last week 100,000 people lost their jobs or quit. We can say that
A) the number of unemployed increased by less than 100,000 people because we should not count those who quit their jobs. B) the 100,000 people represent a stock known as the new unemployed. C) the number of unemployed increased by 100,000 people. D) the 100,000 people represent a flow known as job departures.
Given the demand function in log-linear form: Q = 120 - 1.5P + 12ADV where Q = quantity, P = price, and ADV = advertising expenditures, what is the price elasticity?
A) 1.5, inelastic B) -1.5, elastic C) 120, elastic D) 12, elastic
Suppose that you decide to purchase either stocks or bonds of a particular corporation and you also prefer to receive some returns from the securities every year. Which should you buy - stocks or bonds? Why?
What will be an ideal response?
______ is the measure of economic performance based on the value of all final goods and services produced within a nation during a given period.
a. GNP b. GDP c. NI d. PI