-The Figure Above Shows the Market for Umbrellas in Sunville

question 140

Multiple Choice

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the total deadweight loss?

• A) $2,000
• B) $800
• C) $0
• D) 600 umbrellas

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Definitions:

Indifference Curves

A graphical representation of different combinations of goods or services among which a consumer is indifferent, showing preferences and trade-offs.

Completeness

In the context of preferences, the assumption that any two bundles of goods can be compared, meaning a consumer can decide if one is preferred, the other is preferred, or they are valued equally.

Transitivity

The concept in decision theory and economics that if preference or choice A is preferred to B, and B is preferred to C, then A must be preferred to C.

Marginal Rate

The additional cost or benefit associated with a small unit change in a variable or activity.