Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. Which of the following market outcomes is efficient?
a. Firm A produces a monitor that Cassie buys. David does not purchase a monitor.
b. Firm A produces a monitor that David buys.
c. Firm B produces a monitor that Cassie buys. David does not purchase a monitor.
d. Firm B produces a monitor that David buys.
b
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Since classical economists and monetarists believe that the economy operates at full employment, real GDP, that is, along the vertical segment of aggregate supply,
a. any increase in the money supply can only end up raising the price level b. any increase in the money supply can only end up lowering the price level c. any decrease in the money supply can only end up raising the price level d. changes in the money supply will not affect the price level e. any increase in the money supply will cause both nominal and real GDP to increase
Benefit-cost analysis identifies the
a. allocatively efficient level of risk b. the level of risk at which MSB and MSC of risk reduction are equal c. both (a) and (b) d. none of the above