Producer surplus is represented by ______.
a. the area below the market supply curve and above the market price
b. a sharp downward slope of the supply curve
c. the area above the market supply curve and below the market price
d. the point where the supply and demand curves intersect
c. the area above the market supply curve and below the market price
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Why is the production possibilities frontier concave to (bowed away from) the origin?
A) Consumers have declining marginal utility, so their relative satisfaction from consuming a good changes as they move from high levels to low levels of consumption. B) The shape of the curve is due to the marginal costs of producing the two goods. At high levels of output for a particular good, the marginal cost is very high, and the firm can use the same inputs to produce a relatively large quantity of the other good. C) For a production possibilities frontier, we no longer assume firms are price takers, and the input prices and output prices change as the firms alter their mix of outputs. D) none of the above
All externalities:
A. are harmful to society and create costs external to the decision maker. B. are beneficial to society and create benefits external to the decision maker. C. create either a cost or benefit to a person other than the person who caused it. D. are addressed by the government through taxation.
The term externalities refers to
A. The impact on markets of imported goods. B. Black-market economic activity. C. The inequitable distribution of income. D. The costs or benefits of a market activity borne by a third party.
Adam Smith used the term commercial society to refer to a society in which
A) business interests control the political system. B) everyone identifies value with price. C) everyone lives by exchanging. D) increased income is everyone's principal life goal. E) people behave without regard for the interests of others.