When economists say that market equilibrium is consistent with economic efficiency, they mean the total gains from trade (the combined area of producer and consumer surplus) are smaller than potentially could be the case at a different price and quantity. all units creating more benefit than cost have been produced. some units have been produced that cost more than the benefits they create. consumers and producers have made decisions without properly taking into account the market price.

Your student group is setting up an internship fair. You invite companies looking for interns and students looking for internships and offer them a place to connect. The internship payment is determined as if the fair was a market. Your university wants to encourage this event and offers you an internship subsidy. Whom do you recommend they give the subsidy to?--the students, the companies, both? How much of a subsidy would you recommend?

Last Saturday, Sammy supplied 100 baskets of strawberries at the farmer’s market when the equilibrium price was $3.  This Saturday, he supplied 120 baskets of strawberries when the equilibrium price increased to $4.  Sammy’s producer surplus did not change;  it was the same this Saturday as it was last Saturday. Select one: True False

Suppose that you experience a decrease in your income, which results in an increase in demand for good A. Good A is then.... A normal good. An inferior good. A substitute good. A complementary good. QUESTION 20 Equilibrium in a market is the unique situation where... Both firms and consumers are being efficient. There may be a shortage, but certainly not a surplus. There is no shortage or surplus. Firms have chosen to sell their product at a price that gives them the most profit possible. QUESTION 21 0 1 2 3 4 5 6 Consider this cost structure for a firm Quantity Total Costs 0 1 3 7 15 31 63 Suppose the price of the product that the firm produces is P-5. How much will the firm choose to produce in order to maximize profits? 2 3 4 5