Economic efficiency in a free market occurs when
A) consumer surplus is maximized.
B) producer surplus is maximized.
C) the sum of consumer surplus and producer surplus is maximized.
D) price is as low as possible.
Answer: C
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Refer to Figure 13.1. If the voting method used to select a location for the recreation center is the plurality-rule method, the recreation center will be built in
A) Desert Sands. B) Glacier Cove. C) Mountain View. D) Oceanside.
Suppose the Environmental Protection Agency issues pollution permits in order to limit the quantity of pollution. Under this policy, is the supply of pollution rights perfectly elastic or is it perfectly inelastic?
Exhibit 16-1 Money market demand and supply curves
Beginning from an equilibrium at E1 in Exhibit 16-1, a decrease in the money supply from $150 billion to $100 billion causes people to:
A. sell bonds and drive the price of bonds down. B. sell bonds and drive the price of bonds up. C. buy bonds and drive the price of bonds down. D. buy bonds and drive the price of bonds up.
The marginal benefit of an additional beach towel is $12. The marginal cost of producing an additional beach towel is $8. If producers are minimizing the average costs of production, then we can conclude:
A. beach towel production is allocatively efficient than not productively efficient. B. Beach Tower production is not allocatively efficient but is productively efficient. C. beach towel production is neither allocatively nor productively efficient D. beach towel production is both allocatively and productively efficient