The deadweight loss represents the sum of additional consumer and producer surplus should the firm produce the quantity where P = MC rather than where MR = MC
What will be an ideal response?
True. If P = MC is produced, quantity increases, and the deadweight loss is turned into more CS and PS. This will increase total welfare.
You might also like to view...
Which of the following statements best describes the concept of consumer surplus?
A) "I paid $89 for a microwave oven last week. This week the same store is selling the same microwave oven for $69." B) "Target was having a sale on tube socks so I bought 5 pairs." C) "I sold my hard copy of Harry Potter and the Half-Blood Prince to a used book store for $10 even though I was willing to sell it for $5." D) "I was going to pay $200 for new sunglasses that I had seen at the Oakley store but I ended up paying only $140 for the same sunglasses."
Use the above table. If the marginal revenue product is $10, how many workers will the profit maximizing monopsonist hire?
A. 1 B. 2 C. 3 D. 4
An area of economics that explores how contract or transaction structures can overcome asymmetric information problems is
A. econometrics. B. adverse selection. C. behavioral economics. D. mechanism design.
State and local government pensions tend to be
A. defined contribution programs. B. Ponzi schemes. C. defined benefit pension programs. D. Social Security.