If a perfectly competitive market is in equilibrium and market demand decreases, which of the following would happen?
a. both producer and consumer surplus would increase
b. both producer and consumer surplus would decrease
c. producer surplus would decrease and consumer surplus would increase
d. producer surplus would increase and consumer surplus would decrease
e. producer and consumer surplus would remain unchanged
B
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Suppose the Christmas trees market is perfectly competitive. A business owner is currently suffering from a loss of $1,000, the cost of producing and selling an additional Christmas tree is $20, and the current market price is $25. The owner
A) should sell more trees. B) should shut down his business now. C) should advertise in the market. D) is already minimizing his loss.
A nonprice determinant of supply refers to something that:
A. affects the price other than supply. B. affects supply other than the price. C. determines how large a role prices play in the supply decision. D. determines how prices are affected by the seller's income.