True or false: Consumer surplus is the area between the demand curve and the price line. For a perfectly competitive firm the demand curve equals the price line. Thus, a perfectly competitive industry produces no consumer surplus.
Answer to relevant QuestionsWhy are pecuniary economies and diseconomies said to be the exception rather than the rule?A perfectly competitive firm faces a price of 10 and is currently producing a level of output at which marginal cost is equal to 10 on a rising portion of its short- run marginal cost curve. Its long- run marginal cost is ...The demand for gasoline is P = 5 - 0.002Q and the supply is P = 0.2 + 0.004Q, where P is in dollars and Q is in gallons. If a tax of $1/ gal is placed on gasoline, what is the incidence of the tax? What is the lost consumer ...Why does a profit-maximizing monopolist never produce on an inelastic portion of the demand curve? Would a revenue-maximizing monopolist ever produce on the inelastic portion of the demand curve?Crazy Harry, a monopolist, has a total cost curve given by TC = 5Q + 15. He sets two prices for his product, a regular price, PH, and a discount price, PL. Everyone is eligible to purchase the product at PH. To be eligible ...
Post your question