The Gains from Consumer Surplus and Producer Surplus Occur When

question 147

Multiple Choice

The gains from consumer surplus and producer surplus occur when

• A) both consumers and producers engage in voluntary exchange.
• B) consumers are willing to buy a good but producers are not willing to provide it.
• C) producers are willing to provide a good but consumers are not willing to pay for it.
• D) the government supplies the good instead of firms.

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Definitions:

Net Capital Spending

The total spending on fixed assets minus the proceeds from the sale of fixed assets.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares of the issuing corporation's stock, rather than cash.

Retained Earnings

The portion of net income not distributed as dividends to shareholders but retained by the company for reinvestment in its core business, or to pay debt.

Common Stock

A type of equity ownership in a corporation, where holders have voting rights and potentially receive dividends.