Suppose All Individuals Are Identical,and Their Monthly Demand for Internet

question 65

Multiple Choice

Suppose all individuals are identical,and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 - (1/2) q where p is price in $ per hour and q is hours per month.The firm faces a constant marginal cost of $1.Potential consumer surplus equals

• A) $4.
• B) $8.
• C) $16.
• D) $32.

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Definitions:

Potential Output

The maximum amount of goods and services an economy can produce when it is most efficiently using all its resources.

Recessionary Gap

A situation where an economy's real GDP is lower than its potential GDP, indicating underutilized resources.

Inflation Rate

measures the annual percentage increase in the average price level of goods and services across the economy.

Nominal Wages

The amount of money paid to employees without adjustment for inflation, representing the face value of wages at the time of payment.