Question

TRUE/ FALSE Answer following questions.... 5-. Producer surplus can be defined as the revenue producers make from selling goods in a market. 6- A decrease in the cost of inputs will shift the supply curve down and to the right. 7-. A tax of $4 shifts the supply curve down and to the right by $4. 8-. The price of professional sports tickets is high; therefore, you should blame the owners for taking advantage of the fans, not the other buyers for outbidding you. 9-. When a shortage occurs, the market price increases. 10- In a competitive market, sellers compete with other sellers.

Answer 1

5. FALSE

Reason: Actually, the revenue that producers make by selling goods in a market is called Total Revenue.

6. True

Reason: As the cost of inputs falls, the marginal cost of production decreaes and thus the supply curve will shift rightward.

7. False

Reason: A tax of $4 will shift the supply curve up and leftward by $4.

8. False

Reason: Actually, in a free market economy outbidding by buyers can drive up the prices.

9. True

Reason: In a free market economy, prices rise when there are shortages in the market.

10. True

Reason: In a competitive markets, there are large number of sellers competing with each other.

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