dent Resources ? Online Student Orientation ? Economic surplus is: Select one: O
ID: 1164835 • Letter: D
Question
dent Resources ? Online Student Orientation ? Economic surplus is: Select one: O a. the benefit gained by taking an action. O b. the price paid to take an action. O c. the difference between the benefit gained and the cost incurred of taking an action. O d. the wage someone would have to earn in order to take an action. Game theory is not useful in understanding perfect competition because: Select one O a. by assumption, the firms are so small as to be unable to influence price and thus are not interdependent O b. perfectly competitive firms are honest. O c. the players can't be identified O d. the payoffs to their choices are unknown A payoff matrix is used to show: F12 Insert Dele F9 F10 F11 F6 F7 F8 BackExplanation / Answer
Economic surplus is
The difference between the benefit gained and the cost incurred of taking an action.
It is by definition as the economic surplus is the sum of consumer and producer surplus and the consumer and producer surplus is also calculated by difference between their gaines and cost.
So correct option is C)
Other options are incorrect because -
- Only benefit cannot say that there is an economic surplus because we must compare it with the cost.
- Price alone is never enough to find economic surplus.
- wages is also not able to calculate economic surplus.
Game theory is not useful in understanding perfect competition because:
By assumption, the firms in the perfect competition are so small as to be unable to influence prices and thus are not interdependent.
It is so because game theory is useful only when the firms are interdependent so that any firms action/ decision could influence the decision of the other firm but firms in the perfect competition are interdependent because they all are price taker and also have no significant impact on market so game theory is not useful in this market.
Other options are incorrect -
- honestly cannot be a reason for a market to be able to understand by game theory.
- both C and D options are also not any reason due to which game theory is not useful to understand the market.
So option a) is correct.
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