Graphically, the Area That Represents the Difference Between the Market

question 352

Multiple Choice

Graphically, the area that represents the difference between the market price and the minimum price required to induce suppliers to produce a good is called

• A) consumer surplus.
• B) producer surplus.
• C) marginal cost.
• D) triangular arbitrage.

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Definitions:

Average Total Cost Curve

A graph that shows the cost per unit of output at different levels of production, illustrating how average total cost changes with changes in output.

Short-Run

A period in which at least one of a firm's inputs is fixed and cannot be changed.

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced, which decreases as production increases.

Producing Purses

The activity or business of manufacturing handbags.