If the price of product Y is $25 and its marginal cost is $18:
A. Y is being produced with the least-cost combination of resources.
B. society will realize a net gain if less of Y is produced.
C. resources are being underallocated to Y.
D. resources are being overallocated to Y.
Answer: C
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Which of the following best illustrates the free rider problem?
A) For every purchase of a $100 season pass, you are entitled to free entry to an amusement park for the entire summer. B) If your neighbors redo the landscapes in their yards, it is likely that the value of your house will increase. C) Since no one owns rhinos and rhinos are valued for their horns, rhinos can be hunted to extinction. D) Homeowners in a small neighborhood decide that security lighting is good for the neighborhood. One homeowner installs the lighting and asks you to contribute toward the cost, but you choose not to contribute.
Refer to Figure 9.1. If the market is in equilibrium, the consumer surplus earned by the buyer of the 1st unit is ________
A) $5.00 B) $15.00 C) $22.50 D) $40.00