When marginal benefit exceeds marginal cost in a market,
A) only consumer surplus is reduced.
B) only producer surplus is reduced.
C) consumer surplus and producer surplus are not affected compared to when production is such that marginal cost equals marginal benefit.
D) the deadweight loss is negative.
E) None of the above answers is correct.
E
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The price elasticity of demand is defined as the magnitude of the
A) change in quantity demanded divided by the change in price. B) change in price divided by the change in quantity demanded. C) percentage change in quantity demanded divided by the percentage change in price. D) percentage change in price divided by the percentage change in quantity demanded.
Inefficient resource allocation is a major problem with monopolies.
Answer the following statement true (T) or false (F)
Government gives subsidies to encourage production of products with beneficial externalities.
Answer the following statement true (T) or false (F)
Suppose that the CPI in 1990 was 150, that the inflation rate in 1991 was 6%, and that the inflation rate in 1992 was 4%. What was the CPI in 1991 and 1992?