Exhibit 3A-1 Comparison of Market Efficiency and Deadweight Loss

question 251

Multiple Choice

Exhibit 3A-1 Comparison of Market Efficiency and Deadweight Loss
-As shown in Exhibit 3A-1, if the market price falls from $3.00 to $2.00, then:

• A) consumer surplus increases.
• B) producer surplus increases.
• C) deadweight loss is eliminated.
• D) all of these are true.

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Definitions:

Market Value

The current price at which an asset or company can be bought or sold, determined by the supply and demand dynamics in the market.

Erosion Cost

Costs that occur when the introduction of a new project or product negatively impacts the sales and profits of existing products.

Upgrade

The process of replacing a product with a newer version or installing a newer version of software to improve functionality or performance.