Exhibit 11.2 -Refer to Exhibit 11.2,which Shows the Labor Market.The Vertical Axis

question 190

Multiple Choice

Exhibit 11.2

-Refer to Exhibit 11.2,which shows the labor market.The vertical axis measures wage in dollars,and the horizontal axis measures labor in hours.The economic rent in equilibrium is represented by the area _____

• A) a.
• B) b.
• C) c.
• D) a + b.
• E) b + c.

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Definitions:

Total Surplus

The total net gain to society from a market transaction, which is the combination of consumer surplus and producer surplus.

Consumer Surplus

The gap between the aggregate amount buyers are willing and able to spend for a good or service, versus what they actually spend.

Property Rights

The legally guaranteed rights to own, use, and dispose of assets, including physical and intellectual property.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits received by all parties involved.