The First Welfare Theorem states that, invariably, a competitive market results in an efficient allocation of resources and thus maximizes social surplus. ?
Answer the following statement true (T) or false (F)
False
Rationale: Under certain conditions, decentralized markets maximize total surplus for society, leaving no possible way for anyone (even an omniscient social planner) to change the situation and make someone better off without making anyone else worse off. In other words, under certain conditions, markets are efficient.
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The Banks of the Mississippi has excess reserves of $20,000, desired reserves of $80,000 and the desired reserve ratio is 5 percent. What is the total amount of deposits in this bank?
A) $180,000 B) $100,000 C) $1,000,000 D) $1,600,000 E) $5,000
Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S1 (point A). If there is a surplus of motorcycles how will the equilibrium point change?
A) The equilibrium point will move from A to E. B) The equilibrium point will move from A to B. C) There will be no change in the equilibrium point. D) The equilibrium point will move from A to C.
Most economists believe that a family bases its spending decisions on its transitory income
a. True b. False Indicate whether the statement is true or false
If resources are misallocated in a perfectly competitive market, then, in the long run, profit opportunities will:
A. not bring about a reallocation of resources unless firms are subsidized. B. not bring about a reallocation of resources unless there is government regulation. C. bring about a less efficient allocation of resources. D. bring about a more efficient allocation of resources.