Economy Quiz

Please do the following four questions in the QB02 (I uploaded)

  • 10
  • 24
  • 35 (sunk with respect to any future decision)
  • 36

For the multiple choice questions, you need to explain your answer.

For example: 1. The difference between the maximum price the consumer is willing to pay and the price the consumer actually pays for a product is referred to as: A. market surplus. B. market shortage. C. consumer surplus. D. producer surplus.

Solution: Consumer surplus is defined as the difference between what you ACTUALLY pay and what you are WILLING to pay. Producer surplus is the same for what a seller is WILLING to SELL for. Market surplus and shortages occur when the price is not in equilibrium.