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. in a market equilibrium individuals do not act rationally.
C. efficiency is not an important social goal.
D. sometimes goods entail costs and benefits that do not fall on buyers and sellers.
Answer: D
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The prisoners' dilemma game
A) shows that prisoners are better off if they cooperate. B) shows it is easy to cooperate. C) has an equilibrium in which both prisoners are made as well off as possible. D) would have the same outcome even if the prisoners can communicate and cooperate. E) has an equilibrium in which one prisoner is made as well off as possible and the other prisoner is made as worse off as possible.
Suppose that initially the price of a bag of jellybeans is $6, and the price of a bottle of cola is $2. If the price of a bottle of cola increases, then the relative price of jellybeans
A) increases. B) decreases. C) stays the same, but the relative price of cola increases. D) stays the same, but the relative price of cola decreases.
Firms can only use one form of price discrimination
Indicate whether the statement is true or false
Income generated by a nation's domestic production
a. is less than its domestic production. b. is equal to its domestic production. c. is greater than its domestic production. d. could be less than, equal to, or greater than its domestic production.