Explore BrainMass

Explore BrainMass

    Checking the validity of given statements

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Indicate whether each of the following statements is true or false, and explain why. If a statement is false or true, please provide a full explanation as to why that statement is correct or not.

    a. Consumer surplus is the difference between the minimum and maximum price a consumer is wiling to pay for a good.
    b. Producer surplus is the difference between the actual price a producer receives for a product and the minimum price the producer would have been willing to accept for the product.
    c. For Good A, supply elasticity is +2.5 and price elasticity of demand is -1.5. If an excise tax is imposed on Good A, sellers will pay the more of this tax than buyers.
    d. A perfectly competitive firm can maximize its economic profit or minimize its losses only by adjusting its output.
    e. If a perfectly competitive firm is producing output less than its profit-maximizing output, marginal revenue is greater than marginal cost.

    © BrainMass Inc. brainmass.com October 10, 2019, 5:20 am ad1c9bdddf

    Solution Preview

    a. False, a consumer surplus is the difference between the maximum price that the consumer is wiling to pay and the actual price paid by him for a good.

    b. True, a producer surplus is the amount that producers benefit by selling at a ...

    Solution Summary

    Solution checks the validity of the given statements.