Prices above the free market equilibrium price are inefficient because the willingness to pay by someone to consume an additional unit ________ the marginal cost to someone for producing that unit.
A. exceeds
B. is less than
C. equals
D. None of these; efficiency is defined in terms of natural resources, not market equilibrium.
Answer: B
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
If the demand curve for comic books is expressed as Q = 10,000/p, then demand has a unitary elasticity
A) only when p = 10,000. B) only when p = 100. C) always. D) never.
In the above graphs, an inverse relationship is shown by
A) Graph A. B) Graph B. C) Graph C. D) Graph D.
If a firm in a perfectly competitive market raises its price
A) it will sell more products. B) it will sell fewer products. C) its sales will remain unchanged. D) it will sell nothing.