Use the Following Statements to Answer This Question: I

question 93

Multiple Choice

Use the following statements to answer this question: I. Incomplete information may lead to economic inefficiencies if consumers do not understand the complete set of benefits associated with a particular product.
II) Market power can lead to economic inefficiency, but only if the power is held by sellers and not by buyers (e.g., monopsony) .

• A) I and II are true.
• B) I is true and II is false.
• C) II is true and I is false.
• D) I and II are false.

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Definitions:

Market Price

The price at which a service or asset is presently traded in a given market.

Full Cost

Full cost involves calculating the total cost of production, including both fixed and variable costs, to assess the overall expenses incurred by a business.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing the benefit to consumers from market transactions.

Equilibrium

The market condition where supply equals demand for a product, resulting in a stable price.