A Surplus Occurs Whenever

question 233

Multiple Choice

A surplus occurs whenever

• A) price is below the equilibrium price.
• B) price is above the equilibrium price.
• C) price is equal to the equilibrium price.
• D) the supply curve is downward sloping.

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Definitions:

Increasing Opportunity Cost

Increasing opportunity cost implies that producing more of one good requires giving up an increasing amount of production of another good, reflecting resource specialization.

Consumer Goods

Products and services that are purchased for personal use or consumption.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision or choosing to allocate resources in a particular way.

Production Possibility Frontier

A graph that shows all the highest possible production levels for two products, based on available resources and technological capabilities.