If a Lobster in Maine Costs $10 and That the Same

question 16

Multiple Choice

If a lobster in Maine costs $10 and that the same type of lobster in Massachusetts costs $30,then people could make a profit by

• A)buying lobsters in Maine and selling them in Massachusetts.This action would increase the price of lobster in Massachusetts.
• B)buying lobsters in Maine and selling them in Massachusetts.This action would decrease the price of lobster in Massachusetts.
• C)buying lobsters in Massachusetts and selling them in Maine.This action would increase the price of lobster in Massachusetts.
• D)buying lobsters in Massachusetts and selling them in Maine.This action would decrease the price of lobster in Massachusetts.

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Definitions:

Producer Surplus

The divergence between what producers expect to get for a good or service and the actual compensation they receive.

Deadweight Loss

The loss of economic efficiency when the equilibrium outcome is not achievable or not achieved in a market.

Perfectly Inelastic

A market condition where the quantity demanded or supplied does not change in response to price changes.

Deadweight Loss

An economic inefficiency that occurs when the total welfare in a market is not maximized, resulting from distortions such as taxes, subsidies, or monopolies.