What is deadweight loss and under what conditions does it occur?
What will be an ideal response?
The deadweight loss is the decrease in total surplus that results from an inefficient level of production. This is the decrease in consumer surplus plus the decrease in producer surplus that occurs when the market either overproduces or underproduces relative to the efficient quantity.
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Which of the following is a clear difference between the market system and government?
A) Collective welfare controls government policy; the market system serves the welfare of individuals. B) Competition regulates the market system, but competition does not constrain the actions of government officials. C) The market system serves the interests of some; government serves the interests of all. D) Each of the above statements expresses the difference between the two. E) None of the above expresses the difference between the two.
The prisoner's dilemma is applicable only when considering the illegal behavior that firms in a non-competitive market may pursue
a. True b. False
Which of the following statements is correct about measuring collective demand for public and private goods?
A. Both public and private good demand are found by horizontally adding individual demand curves. B. Private good demand is found by horizontally adding individual demand curves; public good demand is found by vertically adding individual demand curves. C. Both public and private good demand are found by vertically adding individual demand curves. D. Public good demand is found by horizontally adding individual demand curves; private good demand is found by vertically adding individual demand curves.
Which of the following is true any place on the production possibilities curve?
a. Producing more of one item creates less of the other. b. Both items must be produced in equal volumes. c. Only one item may be produced at a time. d. No items can be produced if there is inefficiency.