In a diagram, consumer surplus is always represented by the area:
A. above the demand curve.
B. between the demand curve and the supply curve.
C. between the demand curve and the price.
D. below the demand curve.
Answer: C
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Rosenbaum is purchasing products C and D in utility-maximizing amounts. If the price of C is $4 and the price of D is $2, then:
A) the marginal utility of D is twice that of C. B) the marginal utility of D is the same as that of C. C) the marginal utility of C is twice that of D. D) the marginal utility of C is four times that of D.
The classical theory of aggregate supply where markets are perfectly flexible
a. may or may not be compatible with the Keynesian system. b. is easily added the IS-LM framework of aggregate demand. c. is fundamentally incompatible with the Keynesian system. d. is consistent with the IS-LM framework if all shocks are to the IS curve. e. none of the above.