What is consumer surplus? Why would policy makers be interested in consumer surplus?
What will be an ideal response?
Consumer surplus is the difference between what a consumer is willing to pay for a product and what she actually pays for the product. Since consumer surplus measures the benefit that consumers receive from a good as they themselves perceive it, it serves as a good measure of economic well-being. Thus, if policy makers care about consumer preferences, they could use this measure to make normative judgments about market outcomes.
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Mark owns a cattle ranch near Hugo, Oklahoma. Mark is currently producing beef at an output level where marginal revenue exceeds marginal cost. In order to maximize his profit, Mark should
A) not change his output. B) decrease his output. C) increase his output. D) shut down his ranch. E) probably change his output, but more information is needed to determine if he should increase, decrease, or not change it.
Between the start of 20162016 and the start of 20172017?, a? country's economic growth rate was 4 percent. Its population did not change during the? year, nor did its price level.
What will be an ideal response?