A firm in a perfectly competitive environment sees a market change raise its profit by an amount . Which describes the change in Producer's Surplus?
Tap an option to check your answer.
2 marks, −0.667MicroeconomicsPerfect competitionConsumer and producer surplus and deadweight lossModerateabout 2 min
IIT JAM 2023 Question 13: Perfect competition
Answer and worked solution
Checking your account…
Plain-text version
A firm in a perfectly competitive environment sees a market change raise its profit by an amount K. Which describes the change in Producer's Surplus? (A) The Producer's Surplus increases by K (B) The Producer's Surplus increases by less than K but greater than 0 (C) The Producer's Surplus changes but its direction cannot be known (D) The Producer's Surplus doesn't change
Perfect competition has come up 115 times in 7 exams since 2006.
What this question tests
This question is on Consumer and producer surplus and deadweight loss, part of Perfect competition in Microeconomics.
Measuring gains from trade in a competitive market and the loss when it is distorted.
TestStop has 15 past-paper questions on this subtopic.
Similar questions from other papers
- The market for torch is perfectly competitive. The market demand function for torch is given by X^d=min (400-p,0), p≥0, where p is the price of a torch. The market…
- Consider the demand and supply functions: D(p)=400-8p and S(p)=2p, where p is the unit price and the choke price is Rupees 50. Identify which of the following…
- Which of the following does not hold at the equilibrium price and quantity in a perfectly competitive market?
- In the context of a perfectly competitive market, identify the statement that is NOT CORRECT.
- Which one of the following is the shut-down condition for a profit maximizing firm in a perfectly competitive market? (P = Price, AVC = Average Variable Cost, ATC =…
Question from the IIT JAM 2023 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.