If price support policy increases producer surplus more than reducing consumer surplus, then
A) the policy leads to a Pareto-superior allocation.
B) the policy leads to an increase in social welfare.
C) the policy improves the efficiency of society.
D) None of above.
D
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The price elasticity of supply is usually a positive number because
A) price rises when supply increases. B) quantity supplied increases in response to price increases. C) quantity supplied increases in response to income increases. D) the quantity demanded usually rises when price falls and therefore suppliers would want to capitalize on this increase in demand.
In the model of public goods, when the government chooses public goods provision optimally
A) there is no public goods production. B) public goods are provided in an amount equal to private goods. C) the marginal rate of substitution of private goods for public goods equals the marginal rate of transformation. D) GDP is maximized.