A market equilibrium might not maximize total economic surplus because:
A. in a market equilibrium individuals do not exploit all opportunities for individual gain.
B. sometimes goods entail costs and benefits that do not fall on buyers and sellers.
C. in a market equilibrium individuals do not act rationally.
D. efficiency is not an important social goal.
Answer: B
You might also like to view...
Faced with a shortage of funds to pay claims, the workman's compensation systems in many states have been forced to raise the workman's compensation tax rate substantially. The tax is paid by employers. Employers have complained that they cannot afford the tax and threaten to go out of business. Assuming the supply of labor is very inelastic, one can argue that ultimately the burden of this tax
actually will rest a. mostly on workers. b. mostly on employers. c. about 50/50 on workers and employers, like the Social Security tax. d. all on employers by statute.
Table 4-1
Use this table for the following questions.
Since the replacement of AFDC with TANF the welfare rolls have grown in the United States
a. True b. False
Monopolistically competitive firms offer consumers more variety than perfectly competitive firms.
Answer the following statement true (T) or false (F)