When a competitive equilibrium is achieved in a market
A) the total net benefit to society is maximized.
B) the total benefits to consumers are equal to the total benefits to producers.
C) economic surplus equals the deadweight loss.
D) all individuals are better off than they would be if a price ceiling or price floor was imposed by government.
A
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With respect to the health insurance market, what is moral hazard?
A) Moral hazard refers to the actions people take, after they purchase an insurance policy, that make the insurance company worse off. B) Moral Hazard refers to to people who purchase one type of insurance policy when they would have been better off purchasing a different policy. C) Moral Hazard refers to the situation in which a person purchasing an insurance policy takes advantage of knowing more about his health than the insurance company. D) Moral hazard refers to the actions people take before they purchase an insurance policy.
Refer to Figure 4-1. If the market price is $2.50, what is the consumer surplus on the third ice cream cone?
A) $0 B) $0.50 C) $1.50 D) $2.50