_ 34. Producer surplus from a unit of output is the difference between the marke

Question

_ 34. Producer surplus from a unit of output is the difference between the market price and the seller's cost of producing that unit.

____ 35. When positive externalities are present, it leads to an underallocation of resources in that area relative to that which is socially desirable.

____ 36. If the price elasticity of demand coefficient equals 2, this means a 10 percent increase in price will result in a 20 percent decrease in the quantity demanded.

____ 37. The principle of diminishing marginal returns says that as more and more units of a variable resource are added to a set of fixed resources, the resulting additions to output will become increasingly smaller and, eventually, larger.

Explanation / Answer

T,T,F,T

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