If a perfectly competitive seller is maximizing profit and is making zero economic profit, which of the following will this seller do?
A) go to work in the next-best earning opportunity
B) shut down, with a loss equal to total fixed cost
C) continue at the current output, making zero economic profit
D) increase production in order to make an economic profit
E) remain open but decrease production in order to make an economic profit
C
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Sarah and David both have linear demand curves for lemonade. Sarah's demand curve for lemonade intersects David's demand curve at a price of 50 cents per glass. Sarah's demand curve is more inelastic than David's
A change in the price of lemonade from 50 cents to 25 cents per glass will A) decrease Sarah's consumer surplus more than David's. B) decrease David's consumer surplus more than Sarah's. C) increase Sarah's consumer surplus more than David's. D) increase David's consumer surplus more than Sarah's.
To the extent that the CPI does not accurately measure the true price level,
a. the BLS will change the underlying market basket of goods b. it is useless c. it exaggerates the true cost of living d. it results in underindexation of social security payments e. it underestimates the true cost of living