Deadweight loss occurs when A) producer surplus is greater than consumer surplus. B) the maximum level of total welfare is not achieved. C) consumer surplus is reduced. D) an inferior good is consumed. ANSWER B
Date: September 9th, 2020
Economists claim that measuring society’s welfare as CS + PS A) is inappropriate since ultimately everyone is a consumer. B) is valid only when the same person could be either a consumer or a producer. C) treats the gains to consumers and producers equally. D) is not commonly accepted. ANSWER C
Date: September 9th, 2020
Measuring society’s welfare as 2*CS + 0.5*PS A) gives heavier weight to consumer gains. B) gives heavier weight to producer gains. C) treats the gains to consumers and producers equally. D) treats gains and losses with different weight. ANSWER A
Date: September 9th, 2020
If an economist states that not enough of a good is being produced, she usually means that A) not everyone can afford the good. B) price exceeds marginal cost. C) consumer surplus equals zero. D) at equilibrium, some people who still wish to sell the good cannot find a buyer. ANSWER B
Date: September 9th, 2020
An increase in the deadweight loss (DWL) means A) an additional reduction in welfare by one group that is not offset by a gain to another group. B) an additional reduction in welfare by one group that is offset by a gain to another group. C) an additional increase in welfare by one group that […]
Date: September 9th, 2020
Producer surplus is the sum of the profits earned by all firms in a market. Indicate whether the statement is true or false ANSWER False. This definition ignores fixed costs. Producer surplus minus fixed costs equals profits.
Date: September 9th, 2020
An individual’s ________ surplus is the area ________ the ________ curve and ________ the ________ up to the quantity ________. A) consumer; above; supply; below; market price, produced. B) producer; above; supply; below; market price, produced. C) consumer; below; demand; above; choke price, purchased. D) producer; below; supply; choke price, below; the producer sells. […]
Date: September 9th, 2020
Which of the following expressions can be used to calculate the producer surplus (PS)? A) PS = profit output B) PS = profit + fixed cost C) PS = variable cost – fixed cost D) PS = average cost output ANSWER D
Date: September 9th, 2020
Producer surplus is equal to A) the area under the supply curve. B) the difference between price and average cost for all units sold. C) the difference between price and marginal cost for all units sold. D) the firm’s profit when fixed costs exist. ANSWER C
Date: September 9th, 2020
Changes in a firm’s profit induce ________ in the producer surplus (PS). A) identical changes B) smaller changes C) larger changes D) no changes ANSWER A
Date: September 9th, 2020
