In a perfectly competitive market, if supply and demand fully reflect all of the costs and benefits associated with production and consumption, then total economic surplus is maximized when:
A. consumer surplus and producer surplus are equal.
B. price controls keep prices low enough that most consumers can purchase the item.
C. consumer surplus is greater than producer surplus.
D. the market is in equilibrium.
Answer: D
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A national sales tax is a form of a(n)
a. value-added tax. b. income tax. c. consumption tax. d. capital gains tax.
To achieve allocative efficiency, an economy
A) must produce on its PPF. B) does not necessarily need to be production efficient. C) must have increases in technology. D) might leave some resources unemployed. E) can produce either on or within its PPF.
The marginal benefit of an activity is i. the benefit from a one-unit increase in the activity. ii. the benefit of a small, unimportant activity. iii. measured by what the person is willing to give up to get one additional unit of the activity
A) i only B) ii only C) iii only D) i and iii E) ii and iii
PPP is a theory of real exchange rate determination
Indicate whether the statement is true or false