Efficiency Occurs in a Market When

question 13

Multiple Choice

Efficiency occurs in a market when

• A) consumer surplus is greater than producer surplus.
• B) total revenue is maximised.
• C) consumer surplus is equal to producer surplus.
• D) the sum of consumer surplus and producer surplus is maximised.
• E) consumer surplus is less than producer surplus.

---

Definitions:

Forward Contract

is a non-standardized contract between two parties to buy or sell an asset at a specified future date for a price agreed upon today.

Settlement Date

The date on which a trade is finalized, and the buyer must make payment and the seller must deliver the asset.

Option Contract

A financial contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price within a certain period.

Right

In finance, the prerogative to buy or sell a security under specific conditions, often associated with options.