Answer the following questions true (T) or false (F)
1. There will be no deadweight loss if the marginal benefit to consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.
2. If marginal benefit is less than marginal cost, output is inefficiently high.
3. The difference between consumer surplus and producer surplus in a market is equal to the deadweight loss.
1. TRUE
2. TRUE
3. FALSE
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Economists assume people behave rationally, which means that people
A) never make a mistake. B) do not intentionally make decisions that make themselves worse off. C) have the necessary information to always make correct decisions. D) always understand the consequences of their decisions.
Innovation tends to be an extremely competitive activity that allows few opportunities for firms to share information with one another.
Answer the following statement true (T) or false (F)