6. (T/F) Since the beginning of 2022, the return on the stock market decreased and

volatility increased. All investors' utilities are worse off as a result. (Please use the

indifference curve to illustrate.)

7. (T/F) Farmer Jane's potato store is a perfectly competitive firm which generates $1,000

producer surplus per week. The average variable cost and average fixed cost are $50

and $25, respectively. The marginal revenue is $70. Her profit must be -$200.

8. (T/F) If a firm's producer surplus is negative in the long run, it must also experience

diseconomies of scale.

9. (T/F) A policy enforcing a higher-than-equilibrium price will always lead to lower

consumer surplus, higher producer surplus, lower government revenue, and deadweight

loss.

10. (T/F) From a trade economist's point of view, quotas are preferred to tariffs because the

smaller intervention on price.

11. (T/F) When price in a perfectly competitive market increased from $5 to $10, John's

production increased from 0 to 10. The following relationship must be true:

$5 Lowest Point of Average Cost $10

12. (T/F) An effective subsidy program will make both producers and consumers gain.

TRUE OR FALSE