If the Cost of Producing Sofas Decreases,then Consumer Surplus in the Sofa

question 63

Multiple Choice

If the cost of producing sofas decreases,then consumer surplus in the sofa market will

• A)increase.
• B)decrease.
• C)remain constant.
• D)increase for some buyers and decrease for other buyers.

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Definitions:

Federal Reserve Banks

The 12 regional banks in the Federal Reserve System which serve as the central bank of the United States, responsible for implementing monetary policy, supervising and regulating financial institutions, and providing services to depository institutions, the U.S. government, and foreign official institutions.

Central Banks

National banks that provide financial and banking services for a country's government and commercial banking system, as well as implementing government's monetary policy and issuing currency.

Required Reserve Ratio

The fraction of deposits that banks are required to hold in reserve and not lend out, determined by the central bank.

Interest Rates

The cost of borrowing money or the return on investing, typically expressed as a percentage of the principal, and set by central banks or determined by the market.