Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss

question 180

Multiple Choice

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss
-As shown in Exhibit 3A-2, if the market price falls from P₁ to P₂, then:

• A) total surplus increases.
• B) deadweight loss increases.
• C) overproduction increases.
• D) underproduction decreases.

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Definitions:

Yen Purchase

The act of buying yen, Japan's currency, which can involve exchanging another currency for yen in foreign exchange markets.

Exchange Rate

The value of one currency for the purpose of conversion to another, indicating how much of one currency can be exchanged for another currency.

Current Account Deficit

A situation where a country's total imports of goods, services, and transfers exceed its total exports, indicating that it is spending more on foreign trade than it is earning.

Doubled

Increased by 100%, or made twice as large in amount or number.