The Assumption of Continuous Market Clearing Means That

question 9

Multiple Choice

The assumption of continuous market clearing means that:

• A) sellers can sell all that they want at the going price.
• B) buyers can buy all that they want at the going price.
• C) in any given month, buyers can buy all that they want and sellers can sell all that they want at the going price.
• D) at any given instant, buyers can buy all that they want and sellers can sell all that they want at the going price.

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Definitions:

Allocative Efficiency

A state of the economy in which production represents consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a utility equal to the cost of producing it.

Productive Efficiency

A situation in which an economy or entity is operating in such a way that it cannot produce more of one good without producing less of another.

Creative Destruction

The process by which new innovations cause older technologies, companies, or products to become obsolete, driving economic growth through continuous renewal.

Dominant Firms

Companies that have a major portion of market share and can significantly influence market conditions and prices.