Efficiency in a Market Is Achieved When

question 216

Multiple Choice

Efficiency in a market is achieved when

• A)a social planner intervenes and sets the quantity of output after evaluating buyers' willingness to pay and sellers' costs.
• B)the sum of producer surplus and consumer surplus is maximized.
• C)all firms are producing the good at the same low cost per unit.
• D)no buyer is willing to pay more than the equilibrium price for any unit of the good.

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Definitions:

Operating Income

The profit realized from a business's operations after subtracting operating expenses from revenues.

Activity Level

Refers to the volume of production or the quantity of operations that influences costs in manufacturing or service delivery.

Net Operating Income

Profit generated from a company's core business operations, excluding deductions of interest and taxes.

Flexible Budget

A flexible budget adjusts based on changes in the volume of activity, allowing for a more accurate comparison of actual to budgeted performance.