Question

1. Consumer surplus for an individual buyer is equal to: A) the marginal cost of the good minus the consumer's willingness to pay for the good. he consumer's willingness to pay for the good minus the marginal cost of C) D) producing the good. the price of the good minus the marginal cost of producing the good. the consumer's willingness to pay for the good minus the price of the good. Use the following to answer question 2: Figure: Comparative Advantage Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. Eastland Westland Oranges Oranges 100 100 如 90 70 20 t0 10 0 20 40 80 80 100120 140160180 200 20 40 80 80 100120 140160180 200 Peaches 0 2. (Figure: Comparative Advantage) Look at the figure Comparative Advantage. The opportunity cost of producing 1 box of peaches for Westland is box(es) of oranges. A) 4 B) 10 C) 0.25 D) 1 3. In the paradox of thrift: A) when families and business are feeling pessimistic about the future, they spend B) risky behavior during economic tough times has large negative consequences for more. society firms that are pessimistic about the future lay off the most saving-conscientious C) D) increased saving by individuals increases their chances of becoming unempl Version 1 Page 2

Answer 1

1) consumer surplus for an individual buyer is equal to the consumers willingness to pay for the good minus the price of the good.

so, correct option is D.

2) the opportunity cost of producing 1 box of peaches for westland is .25 (50/200) boxes of orange.

.so, correct option is C.

3) in the paradox of thrift: increased saving by individuals increases their chances of becoming unemployed.

so, correct option is D.