Markets Achieve an Efficient Allocation of Resources When

question 10

Multiple Choice

Markets achieve an efficient allocation of resources when

• A)public goods are produced.
• B)external benefits are present.
• C)the market is a monopoly.
• D)subsidies are paid to producers.
• E)marginal social benefit equals marginal social cost.

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Definitions:

Treasury Bonds

Long-term government securities issued by the U.S. Department of the Treasury, with a maturity period typically extending beyond ten years, offering periodic interest payments and repaying the principal at maturity.

Bid Price

The maximum price that a buyer is willing to pay for a security.

Ask Price

The price at which a seller is willing to sell a security or asset.

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy an asset at a specified price within a specified time.