Policies that restrict supply could generate an increase in social welfare because the increase in producer surplus could exceed the decrease in consumer surplus
Indicate whether the statement is true or false
False. One impact of a supply restriction is an exchange from consumers to producers. The net effect on social welfare is zero. Additionally, there is a deadweight loss. This is the additional surplus that could be generated if supply were not restricted. This effect is always negative. As a result, social welfare always declines in response to a supply restriction.
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The opportunity cost of holding money refers to
A) the service fees associated with checking accounts. B) the service fees associated with checking accounts plus the costs undertaken to prevent theft. C) the interest that could have been earned if the money balances had been transferred to an interest-bearing asset. D) the pleasure that would have been received if the money balances had been used to buy a good or service.
Suppose you observed that at the same time employment increased, wages fell. Which of the following is a possible explanation for this observation?
a. An increase in labor demand b. A decrease in labor demand c. An increase in labor demand that was outpaced by an increase in labor supply d. A decrease in labor supply e. Cannot be determined from the available information