When a perfectly competitive, well-functioning market is in equilibrium:
A. total surplus is maximized.
B. the market is efficient.
C. deadweight loss is zero.
D. All of these are true.
D. All of these are true.
You might also like to view...
In a simple economy without government or the foreign sector, saving must equal investment because output is divided into consumption and investment, and income is either consumed or saved
Indicate whether the statement is true or false
If policymakers implement an expansionary fiscal policy but do not take into account the potential for crowding out, the new equilibrium level of GDP is likely to
A) be at potential GDP. B) be below potential GDP. C) be above potential GDP. D) There is insufficient information given here to draw a conclusion.
If the price of a commodity is above marginal cost, then the economy will tend to
a. overproduce the item. b. underproduce the item. c. produce the optimal amount of the item. d. overproduce and underproduce the item cyclically.
Explain how various components work together in the decision-making process of the free market system.
What will be an ideal response?