When a Perfectly Competitive, Well-Functioning Market Is in Equilibrium

question 37

Multiple Choice

When a perfectly competitive, well-functioning market is in equilibrium:

• A) total surplus is maximized.
• B) the market is efficient.
• C) deadweight loss is zero.
• D) All of these are correct.

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Definitions:

Required Rate

Often refers to the minimum expected rate of return on an investment, taking into account the risk level.

Markup

The amount added to the cost of a product to cover expenses and profit, resulting in the selling price.

Absorption Costing

By adopting this accounting model, all manufacturing costs including direct materials, direct labor, and both variable and fixed overheads, are rolled into the product’s cost.

Required Return

The minimum profit or yield that investors expect to earn on an investment.