After a price floor of $23 is placed on the market in the graph shown, which area represents total surplus?
A. A
B. A + B + C + E + F
C. A + B + E
D. B + C + E + F
Answer: C
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If the supply curve for orange juice is estimated to be Q = 40 + 2p, then
A) supply is price elastic at all prices. B) supply is price inelastic at all prices. C) supply is elastic only at prices below 20. D) No general statements about price elasticity of supply can be made.
A firm that cheats in a cartel earns a higher profit because: a. it sells more units of its own output
b. it charges more dollars per unit of its output. c. it earns from economies of scale. d. it is able to cut its costs by undercutting the cartel.
Which of the following is a characteristic of a natural monopoly?
a. Average cost exceeds marginal cost over large regions of output. b. Increasing the number of firms increases each firm's average total cost. c. One firm can supply output at a lower cost than two firms. d. All of the above are correct.
Closed economies generally do ________ open economies, in the long run.
A. about the same as B. better in some ways and worse in other ways than C. worse than D. slightly better than