Assume the Market Depicted in the Graph Is in Equilibrium

question 135

Multiple Choice

Assume the market depicted in the graph is in equilibrium. Which of the following statements is true?

• A)Consumer surplus is greater than producer surplus.
• B)Producer surplus is greater than consumer surplus.
• C)Consumer surplus is the same as producer surplus.
• D)Total surplus is smaller than producer surplus.

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Definitions:

Profit-maximizing Firm

A company that adjusts its production and sales levels to achieve the highest possible profit based on its cost structure and market price.

MRP = MRC

An equality suggesting that the marginal revenue product (additional revenue from one more unit of an input) equals the marginal resource cost (cost of acquiring one additional unit of the input).

Resource Price

The cost associated with acquiring resources needed for production, such as labor, land, and capital.

Derived Demand

Demand for a good or service that arises from the demand for another good or service.