If a $50 subsidy is legally (statutorily) granted to the sellers of weed eaters and as a result the price of weed eaters to consumers falls by $30, the actual benefit of the subsidy

In a market characterized by many sellers, assume that transaction costs for both buyers and sellers are both costlessly cut to zero. What will happen to total economic value?

a. Economic value will remain unchanged because the decrease in consumer surplus will offset the increase in producer surplus. b. Economic value will remain unchanged because the decrease in producer surplus will offset the increase in consumer surplus. c. Economic value will certainly increase but its magnitude will depend on the initial transaction costs of the market participants. d. Economic value will certainly decrease but its magnitude will depend on the initial transaction costs of the market participants.

When deriving the production possibilities curve, it is assumed that

A) the amount of each good that is to be produced is fixed. B) the prices of resources are fixed along the curve. C) most resources can be used to produce only one good. D) resources are efficiently used.