In perfect competition in the long-run equilibrium, can consumer surplus or producer surplus be increased? Explain your answer
What will be an ideal response?
Once at the competitive equilibrium quantity, which is the same as the efficient quantity, the sum of consumer surplus plus producer surplus is as large as possible. If the price is lowered, consumer surplus increases but only at the expense of a larger decrease in producer surplus. And the lower price is not the long-run equilibrium price.
If the price is raised, producer surplus increases but only at the expense of a larger decrease in consumer surplus. And the higher price is not the long-run equilibrium price.
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Which of the following is consistent with secular deflation?
A) a persistently decreasing price level caused by money being withdrawn from the economy B) a persistently increasing price level caused by several periods of economic growth with decreasing AD C) a persistently decreasing price level caused by increases in government expenditures D) a persistently decreasing price level caused by several periods of economic growth with stable AD
Which of the following was NOT a cause or a characteristic of the 1994/95 Mexican peso crisis?
A) An overvalued exchange rate B) An inflow of large foreign portfolio capital C) The inability of the IMF, the world bank, and the NAFTA member countries (i.e., the United States and Canada) to predict the looming financial crisis D) Shifts by the world capital markets toward more conservative and risk-averse investments because of interest and exchange rate movements around the world E) High domestic investments with insufficient domestic savings
If the market price is $5 and you are currently producing at a level where average total cost is $3 and falling, you should:
a. b or c, it doesn't matter. b. shut down. c. produce only enough to cover variable costs. d. produce where MR = MC. e. produce until the average total cost and average revenue are equal.
Employers and workers in the protected industry know that the consequences of protection are principally:
a. lower prices for their output, lower profits for owners, and lower wages for workers. b. higher prices for their output, lower profits for owners, and lower wages for workers. c. higher prices for their output, lower profits for owners, and higher wages for workers. d. lower prices for their output, higher profits for owners, and higher wages for workers. e. higher prices for their output, higher profits for owners, and higher wages for workers.