Producer surplus is the sum of the profits earned by all firms in a market
Indicate whether the statement is true or false
False. This definition ignores fixed costs. Producer surplus minus fixed costs equals profits.
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The fact that the CPI is a biased measure of the inflation rate means government outlays will
A) increase at a slower rate than the actual inflation rate. B) increase at the same rate as the actual inflation rate. C) increase at a faster rate than the actual inflation rate. D) sometimes increase faster and sometimes increase slower than the actual inflation rate depending on whether the actual inflation rate exceeds 1.1 percent per year or is less than 1.1 percent per year. E) None of the above because the bias in inflation measured using the CPI has nothing to do with government outlays.
A downward-sloping demand curve suggests that consumers
A) buy less at lower prices. B) buy more at higher prices. C) plan to buy more at a given, lower price. D) ignore marginal benefits and only focus on the supply of a product.