In General (And in the Absence of Market Failures), Economic

question 7

Multiple Choice

In general (and in the absence of market failures) , economic surplus will be maximized and economic efficiency will be achieved

• A) when consumers and producers can agree on the most advantageous division of economic surplus.
• B) when the government is able to impose an equilibrium price.
• C) when resources are allocated such that production of the good is maximized.
• D) in a competitive market where price is free to achieve its market- clearing equilibrium level.
• E) when the government successfully determines what is best for society as a whole.

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Definitions:

Total Assets

The sum of all assets owned by a company, listed on the balance sheet, representing the resources it has available to generate future profits.

Average Sale Period

The average amount of time it takes for a business to sell its inventory.

Debt to Equity Ratio

A financial ratio that compares the total liabilities of a company to the total amount of shareholder equity.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity position of the business.