The sum of consumer surplus and producer surplus is equal to
A) the deadweight loss.
B) the economic surplus.
C) zero.
D) total profit.
Answer: B
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Sellers have a strong incentive to lobby government for legal restrictions that would reduce the intensity of competition in their market because
a. the firms wish to be more efficient than competition will permit. b. competition tends to result in lower prices and lower profits. c. legal restrictions that lessen competition in a market generally benefit consumers. d. the firms fear that intense competition will lead to higher profits that will attract additional rivals into the market.
Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision?
A) zero, since she will no longer be earning a salary B) It depends on the "going rate" for home-care providers. C) at least $125,000 D) the value she attributes to the satisfaction she receives from taking care of her parents