When economists say that market equilibrium is consistent with economic efficiency, they meanthe total gains from trade (the combined area of producer and consumer surplus) are smaller than potentially couldbe 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.

Economic efficiency implies that all the resources are completely utilized. Total surplus, including…

Answered: When economists say that market…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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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
In the market for a pair of shoes, Jena is willing to pay $75 for a pair while Jane is willing to pay $85 for a pair. The actual price that each must pay for a pair of shoes is $65. What is the combined amount of consumer surplus of Jena and Jane? Multiple Choice $10 $160 $30 $20
Price (dollars per unit) Price (dollars per unit) D Quantity (units per month) Figure B Quantity (units per month) Figure A Price (dollars per unit) Price (dollars per unit) D Quantity (units per month) Quantity (units per month) Figure C Figure D The above figure shows the demand curves in four different markets. If each of the markets has an identical upward sloping supply curve and the same tax is levied on suppliers, which market would produce the largest amount of deadweight loss? A) B B) C C) A D) D
List the main characteristics of the market system.
Economic surplus is maximized in a competitive market when . options: The deadweight loss equals zero. All the options are correct. Quantity demanded is equal to quantity supplied. Marginal benefit equals marginal cost.
The first fundamental theorem of welfare economics states that a general competitive equilibrium is Pareto efficient. Explain with the aid of diagrams.
Assume that a price floor of $320 has been implemented and there are no wasteful quality improvements. What are the total gains from trade (total surplus) with a price floor of $320? Hint: enter your answer as a number only with no $ sign Example: if the answer is $10,000, enter 10,000 2,400
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What is a free market a) a store where goods are free b) an economy controlled by the government c) a system based on competition between privately owned businesses offering a similar product or service d) factories that do not have to pay rent

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