Author Question: The deadweight loss represents the sum of additional consumer and producer surplus should the firm ... (Read 26 times)

bio_gurl · **on:** Jul 1, 2018

The deadweight loss represents the sum of additional consumer and producer surplus should the firm produce the quantity where P = MC rather than where MR = MC.

Indicate whether the statement is true or false

Question 2

If a competitive firm is in short-run equilibrium, then

A) profits equal zero.
B) it will not operate at a loss.
C) an increase in its fixed cost will have no effect on profit.
D) an increase in its fixed cost will have no effect on output.

triiciiaa · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

True . If P = MC is produced, quantity increases, and the deadweight loss is turned into more CS and PS. This will increase total welfare.

Answer to Question 2

D