Why is a competitive market efficient?
What will be an ideal response?
Efficiency is attained when production is such that the marginal social benefit equals the marginal social cost. When a competitive market is at equilibrium, the quantity demanded equals the quantity supplied, that is, the demand and supply curves cross. But the marginal social benefit curve is the same as the demand curve and the marginal social cost curve is the same as the supply curve. Thus equilibrium occurs at the point where the marginal social benefit curve crosses the marginal social cost curve. As a result, so the marginal social benefit equals the marginal social cost and hence the market is efficient.
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Countries like _________ have no reserve requirements at all
a. England b. Canada c. Australia d. all of the above e. none of the above.
The money supply known as M3
a. does not include credit union accounts b. excludes certificates of deposit c. includes M2 + large denomination time deposits and repurchase agreements d. excludes travelers' checks e. does not include demand deposits