When Property Rights Are Well Defined and Markets Are Competitive

question 42

Multiple Choice

When property rights are well defined and markets are competitive,

• A) the total gains from trade (the combined area of producer and consumer surplus) are maximized at the market equilibrium.
• B) the market equilibrium is consistent with economic efficiency in that all units creating more benefit than cost have been produced.
• C) the market will automatically move toward the price and quantity where the quantity supplied and the quantity demanded are in balance.
• D) all of the above are true.

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Definitions:

Two-Factor Theory

A theory in psychology that proposes that emotional experiences arise from a combination of a physiological response and a cognitive interpretation of that response.

Cognitive Activity

Any mental process that involves understanding, processing, and storing information, including perceiving, thinking, and memory.

Autonomic Nervous System

The part of the nervous system that controls involuntary body functions, such as heartbeat, digestion, and breathing.

James-Lange Theory

A theory of emotion that suggests our physiological reactions to stimuli (e.g., trembling, sweating) precede and give rise to the emotional experience (e.g., fear).