Which of the following conditions holds in an economically efficient competitive market equilibrium?
A) Producer and consumer surplus are exactly equal in size.
B) There are no positive and no negative external effects from consumption and production.
C) The deadweight loss is positive but at a minimum.
D) The marginal benefit of the last unit produced and consumed is maximized.
B
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In the economic way of thinking, "outsourcing" is another application of
A) the entrepreneurial attempt to buy low, and sell high. B) voluntary exchange. C) the coordination of plans across different regions. D) the discovery of people's comparative advantage. E) all of the above.
The argument that an increase in aggregate demand, as a result of an increase in government purchases, will be offset by increases in savings (less current consumer spending) for future taxes is called:
a. the crowding out effect b. the Ricardian equivalence theorem c. the budget deficit effect d. the budget surplus effect