If marginal benefit is equal to marginal cost, then the
A) producer surplus is equal to the consumer surplus.
B) sum of producer surplus and consumer surplus is as large as possible.
C) sum of producer surplus and consumer surplus equals zero.
D) market has squeezed out total surplus so that it equals zero.
E) deadweight loss is more than zero but less than its maximum.
B
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Oil and oil products remain the main fuel for cars, planes, ships, and power plants. The amount of oil still in the earth is finite. Given this information, the supply of gasoline is ________.
A. relatively elastic B. greater than the quantity demanded C. relatively inelastic D. unit elastic
Sears and Wal-Mart must decide whether to lower their prices, based on the economic profits shown in the table above. Which of the following is TRUE?
A) This situation is not a prisoners' dilemma. B) If Sears lowers its prices and Wal-Mart does not, Sears will make a $20 million economic profit. C) If Wal-Mart lowers its prices, Sears should keep its prices high. D) Both Sears and Wal-Mart would jointly be better off if they could each keep their prices high.
Suppose General Motors issues a four-year bond with a face value of $20,000 that pays an annual coupon payment of $600. What is the interest rate that General Motors is paying on the borrowed funds?
a. 12% b. 6% c. 15% d. 3%
What are the short-run economic effects when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?
A) The wage rate in the U.S. will remain the same, and the wage rate in the foreign country will decrease. B) The wage rate in the U.S. will increase, and the wage rate in the foreign country will decrease. C) The wage rate in the U.S. will decrease, and the wage rate in the foreign country will decrease. D) The wage rate in the U.S. will decrease, and the wage rate in the foreign country will increase.