If the Demand Curve Reflects Consumers' Full Willingness to Pay

question 31

Multiple Choice

If the demand curve reflects consumers' full willingness to pay, and the supply curve reflects all costs of production, then which of the following is true?

• A) The benefit surpluses shared between consumers and producers will be maximized.
• B) The benefit surpluses received by consumers and producers will be equal.
• C) There will be no consumer or producer surplus.
• D) Consumer surplus will be maximized, and producer surplus will be minimized.

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Definitions:

Marginal Extraction Cost

The additional cost associated with extracting one more unit of a resource.

Treasury Bill

A short-term government security issued at a discount from the par value and pays no interest, maturing in a year or less.

Treasury Bond

Long-term government debt securities with a fixed interest rate and maturity of more than 10 years.

Short-Term

A period of time that is relatively brief, usually focusing on immediate or near-future events or goals, often contrasted with long-term perspectives.