The difference between the value of a product enjoyed by consumers and the total variable costs incurred by producers in a competitive market for that product is
A. producer surplus.
B. consumer surplus.
C. the difference between consumer surplus and producer surplus.
D. the sum of consumer surplus and producer surplus.
Answer: D
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If a farmer produces 1000 bushels of corn using ten acres of land and one tractor and is able to produce 2000 bushels of corn using twenty acres of land and one tractor, the farmer has
A) increasing returns to scale. B) constant returns to scale. C) decreasing returns to scale. D) no returns to scale.
If the nominal interest rate is 8 percent and the real interest rate is 3 percent, then the inflation rate equals:
A. 5 percent. B. 8 percent. C. 11 percent. D. 3 percent.
When a person throws a cigarette out of a car window and starts a brush fire, this is
A. an example of a public good. B. an example of an external cost. C. an example of market power. D. an example of an external benefit.
If a monopolistically competitive firm has excess capacity
A) it is experiencing diseconomies of scale. B) it produces a level of output that places it on the negatively sloped portion of its average total cost curve. C) it is producing beyond the minimum efficient scale. D) it has exhausted all economies of scale.