A Market Is Allocatively Efficient If

question 157

Multiple Choice

A market is allocatively efficient if

• A) the sum of the consumer surplus and the producer surplus has been maximized.
• B) consumer surplus has been maximized.
• C) producer surplus has been maximized.
• D) profit has been maximized.

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Definitions:

Bank of Canada

Canada's central bank, responsible for monetary policy, issuing currency, and regulating financial institutions.

Securitized Assets

Financial securities that are created by pooling various types of contractual debt such as mortgages, and selling them to investors.

Convertibles

Refers to convertible bonds or preferred stocks that can be converted into a predetermined amount of the company's equity at certain times during their life, usually at the discretion of the bondholder.

Warrants

Financial instruments that give the holder the right, but not the obligation, to buy a company's stock at a specific price before a certain date.