The graph below represents the market for lychee nuts. The equilibrium price is $7.00 per bushel, but the market price is $5.00 per bushel
Identify the areas representing consumer surplus, producer surplus, and deadweight loss at the equilibrium price of $7.00 and at the market price of $5.00.
At the equilibrium price of $7.00:
Consumer surplus is represented by area A + B.
Producer surplus is represented by area C + D + E.
There is no deadweight loss.
At the market price of $5.00:
Consumer surplus is represented by area A + C.
Producer surplus is represented by area E.
Deadweight loss is represented by area B + D.
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A firm that maximizes its profits by producing a certain level of output must also:
a) maximize its revenue. b) minimize its variable costs. c) maximize its output d) maximize its sales. e) minimize its cost of producing that output.
According to the economic analysis of democracy, citizens do not acquire sufficient information to vote intelligently because
A) money controls the media. B) private concerns matter more to them than public affairs. C) they are apathetic about government. D) they know their vote doesn't really matter. E) the country is a republic, not a democracy.