Answer the following statement(s) true (T) or false (F)
1. The supply curve for the entire market looks like a staircase.
2. Total welfare gains are the difference between consumer and producer surpluses.
3. A deadweight loss is the reduction in both consumer and producer surpluses.
4. If consumers valued the last unit of a product by more than it cost to produce, then welfare could be increased by producing less output.
5. Sometimes innocent bystanders are impacted by the decisions of buyers and sellers.
1. False
2. False
3. True
4. False
5. True
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A command system is a
A) method of organizing production that uses a market-like mechanism inside the firm. B) method of organizing production that uses a managerial hierarchy. C) set of rules that induce an agent to act in the best interest of a principal. D) method of production that implements an assembly-line process.
Bubba is a shrimp fisherman who used $2,000 from his personal savings account to buy a boat and equipment for his shrimp business. The savings account paid 2% interest. What is Bubba's annual opportunity cost of the financial capital that he invested in his business?
a. $20 b. $40 c. $200 d. $400
Mergers can sometimes be good for a market by allowing firms to take advantage of economies of scale.
Answer the following statement true (T) or false (F)
The relationship between the level of prices and the total demand for all goods and services is known as:
A. aggregate supply. B. market supply. C. aggregate demand. D. market demand.