Given a Typical Downward-Sloping Demand Curve in a Market That

question 122

Multiple Choice

Given a typical downward-sloping demand curve in a market that has reached its equilibrium,the consumer surplus

• A)is measured by the area above the market price and under the demand curve.
• B)is measured by the area below the market price and under the demand curve.
• C)is measured by the area immediately above the demand curve.
• D)is calculated as the product of market price and quantity consumed.
• E)cannot be measured given the information.

---

Definitions:

Purely Competitive

A market structure characterized by a large number of small firms producing similar products, with easy entry and exit from the market, leading to price-taking behavior.

New Firms

New firms refer to businesses that have been recently established and are in the early stages of their operational life.

Long-Run Equilibrium

A state in which all factors of production can be adjusted, allowing firms to enter or exit the market, resulting in a situation where economic profits are zero in a perfectly competitive market.

P = MR

An economic principle where the price (P) of a product equals its marginal revenue (MR), often applied in perfectly competitive markets.