Consumer surplus exists when
A) it costs less to produce goods than buyers must pay for them.
B) consumers value the good more highly than what they must pay to buy it.
C) taxes on goods are less than the appropriate amount.
D) the marginal benefit of the good is always equal to or less than the price of the good.
E) the price of the good is greater than the marginal cost of producing a unit of the good.
B
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Suppose the MPC is 0.8 in Canada and the MPC h is 0.55. If income increases by $100 million in Canada, then the increase in consumption of foreign goods will be:
a. $35 million. b. $25 million. c. $80 million. d. $100 million.
In a world with few impediments to capital mobility, the domestic interest rate equals the sum of the foreign interest rate and the expected depreciation of the domestic currency, a situation known as the
A) interest parity condition. B) purchasing power parity condition. C) exchange rate parity condition. D) foreign asset parity condition.