Chad is willing to pay $5.00 to get his first cup of morning latté. He buys a cup from a vendor selling latté for $3.75 per cup. Chad's consumer surplus is
a. $8.75.
b. $5.00.
c. $3.75.
d. $1.25.
d
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The increase in the demand for widgets, shown in the figure above, is the result of a decrease in the price of McBoover devices from $11 to $9. Therefore, the cross-price elasticity for these two products is
A) -2.0. B) -0.5. C) 0.5. D) 2.0.
In the long run, monopolistically competitive firms make zero economic profit because of
A) excess capacity. B) product variety. C) easy entry and exit. D) government regulation.
Improvements in labor productivity
A) affect the level of wages, but do not affect the rate of economic growth. B) affect the level of profit, but do not affect the rate of economic growth. C) hinder economic growth, because they cause unemployment. D) contribute to economic growth.
Use the above table. What will the price be before external costs are internalized with a tax?
A) $14 B) $13 C) $12.20 D) $1.80