In a Free Market in Which an Equilibrium Price and Quantity

question 44

Multiple Choice

In a free market in which an equilibrium price and quantity prevails:

• A) consumer surplus is less than producer surplus.
• B) consumer surplus is greater than producer surplus.
• C) consumer surplus is the same as producer surplus.
• D) consumer surplus and producer surplus are maximized.

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Definitions:

Unit-price Elastic

Describes a situation where the percentage change in quantity demanded is equal to the percentage change in price, indicating a unitary elasticity of demand.

Greens Fees

The charges imposed by a golf course for the right to play on the course.

Quantity Effect

The change in the quantity of a product demanded or supplied in response to a change in price.

Total Revenue

The total income a firm receives from selling its goods or services, calculated by multiplying the price per unit by the number of units sold.