When a Market Is in Equilibrium and the Marginal Consumer

question 196

Multiple Choice

When a market is in equilibrium and the marginal consumer values a commodity at less than the social cost of producing it, which of the following are true?
(i) at market equilibrium the demand curve lies below the social cost curve
(ii) reducing production to a level below the equilibrium level could possibly raise total economic wellbeing
(iii) the equilibrium price is higher than necessary to insure maximum economic wellbeing

• A)(i) and (ii) only
• B)(i) and (iii) only
• C)(ii) and (iii) only
• D)(i), (ii) and (iii)

---

Definitions:

Generalized Anxiety Disorder

A mental health disorder characterized by persistent and excessive worry about a number of different things, leading to significant distress or impairment in functioning.

Compulsion

A psychological phenomenon where individuals feel the urgent need to perform certain behaviors or rituals irrationally.

Obsession

An uncontrollable and persistent thought, idea, or feeling that dominates a person's mind.

Habit

A regular practice or routine that is hard to give up, often performed unconsciously.