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Question
CHAPTER 5: Market Outcomes and Tax Incidence
Consumer surplus is defined as the
a. difference between the willingness to pay for a good and the willingness to sell it.
b. total revenue earned from producing and selling some good.
c. difference between the willingness to pay for a good and the price paid to get it.
d. quantity of units that consumers want to buy at the market price.
e. difference between the price the seller receives and the willingness to sell it.
Answer
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Suppose Solomon lives in a community with no price controls. What do you expect will happen if his town borders a community where there is a binding price ceiling on most products?
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