Producer surplus is:
a) equal to the area under the supply curve.
b) the difference between the maximum price consumers are willing to pay and the minimum price producers are willing to accept.
c) the total amount paid for the good.
d) the price received for a good minus its marginal cost, summed over the quantity sold.
e) equal to the opportunity cost of production.
Ans: d) the price received for a good minus its marginal cost, summed over the quantity sold.
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Kevin is a student who is yet to join a university in California. In the evening, he takes music lessons. Kevin has to decide on an apartment to rent
The apartment should be at a suitable distance from two places: his university, and from his music classes. The commuting time from apartments in four different locations to both destinations are shown in the table below. Given that Kevin's opportunity cost of time is $10 per hour, find his optimum choice using: a) optimization in levels. b) optimization in differences. Apartment Commuting Time to University (hours per month) Commuting Time to Music Classes (hours per month) Rent ($ per month) 1 10 10 2,500 2 16 24 2,200 3 36 24 1,900 4 45 35 1,800
The money multiplier
A) equals 1 over the required reserve ratio. B) is an expression that converts the monetary base to the money supply. C) is larger than the simple deposit multiplier. D) is completely controlled by the Fed.