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2. Market equilibrium maximizes the total surplus in a market and therefore it is efficient.

A) True

B) False

3. Market equilibrium guarantees that all mutually beneficial transactions take place.

A) True

B) False

4. A maximum price below the market equilibrium price will lower the total surplus of the market.

(A) True

(B) False

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Samantha Balando
Samantha BalandoLv7
28 Sep 2019

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Related questions

True or False:

1. Consumer surplus is the buyer's willingness-to-pay minus the seller's opportunity cost of production.

2. If your willingness-to-pay for a hamburger is $3 and you paid $2, then your consumer surplus is $5.00

3. The opportunity cost of production for a seller includes the implicit cost of the seller's time.

4. The height of the supply curve at a selected quantity is the seller's opportunity cost of producing that marginal unit.

5. Total surplus (total well-being) is the seller's cost of production minus the buyer's willingness-to-pay.

6. The competitive market equilibrium outcome is efficient because it allocates the produced output to the buyers who place the highest value on the good

7. Producer surplus is the area above the supply curve and below the price.

8. The competitive market equilibrium outcome maximizes total surplus (total well-being)

9. Producing and consuming more of a good will always increase the total surplus(total well-being).

The most important characteristic of the equilibrium price is that it:
 
a. guarantees that producers earn profit
 
b. maximizes the quantity supplied
 
c. maximizes the quantity demanded
 
d. minimizes the quantity demanded
 
e. clears the market, leaving neither a surplus nor a shortage
The most important characteristic of the equilibrium price is that it ________.
 
a. guarantees that producers earn profit
 
b. maximizes the quantity supplied
 
c. maximizes the quantity demanded
 
d. minimizes the quantity demanded
 
e. clears the market, leaving neither a surplus nor a shortage

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