Even though a perfect price discriminator can extract all of the consumer surplus, how can it be efficient?
What will be an ideal response?
Efficiency has nothing to do with who gets the surpluses; that is, efficiency has nothing to do with whether the consumer surplus (or producer surplus) is large or small. Instead, a market is efficient as long as there is no deadweight loss. Because there is no deadweight loss with perfect price discrimination, even though the amount of consumer surplus is as small as possible—zero!—and the producer surplus is as large as possible, nonetheless the market is efficient.
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Refer to Table 2-15. Which of the following statements is true?
A) Jack has a comparative advantage in lawn mowing and George in garden cultivating. B) Jack has a comparative advantage in garden cultivating and George in lawn mowing. C) George has a comparative advantage in both tasks. D) Jack has a comparative advantage in both tasks.
Market equilibrium occurs where supply equals demand
Indicate whether the statement is true or false