Figure 7-7 -Refer to Figure 7-7.What Happens to the Consumer Surplus If

question 45

Multiple Choice

Figure 7-7
-Refer to Figure 7-7.What happens to the consumer surplus if the price rises from $100 to $150?

• A)The new consumer surplus is half of the original consumer surplus.
• B)The new consumer surplus is 25 percent of the original consumer surplus.
• C)The new consumer surplus is double the original consumer surplus.
• D)The new consumer surplus is triple the original consumer surplus.

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Definitions:

Zero Profits

A situation where a company's total revenues equal its total costs, meaning it is breaking even and not generating any profit.

P = MC

An equation that states that the price (P) of a product is equal to its marginal cost (MC), indicating the point at which the production of one more unit of a good or service is exactly covered by the sale price, often used in the context of perfect competition markets.

MC > ATC

Denotes a situation in which the marginal cost of producing an additional unit of a good is greater than the average total cost, implying that producing more of the good will increase the per unit cost.

Positive Profits

When a company or business generates earnings that exceed its costs and expenses, resulting in a net gain.