It Costs Suppliers $1 to Produce Each Additional Widget, and Widgets

question 133

Multiple Choice

It costs suppliers $1 to produce each additional widget, and widgets sell for $2. Some consumers are not willing to pay $2 for a widget but are nevertheless willing to pay more than $1. Which of the following statements is TRUE?

• A) The market is at equilibrium.
• B) Suppliers must be reaping big profits.
• C) There are unexploited gains from trade.
• D) Consumers will bid up prices.

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Definitions:

Rehearsal

The process of practicing or repeating information or skills to enhance memory retention or improve performance.

Relearning

The process of learning information or skills more quickly when they are studied again after having been partially or completely forgotten.

Explicit Memory

The conscious, intentional recollection of factual information, previous experiences, and concepts.

Implicit Memory

A type of long-term memory that does not require conscious thought and involves skills and routines that are performed automatically.