At the Output Level Defining Allocative Efficiency

question 125

Multiple Choice

At the output level defining allocative efficiency,

• A) the areas of consumer and producer surplus necessarily are equal.
• B) marginal benefit exceeds marginal cost by the greatest amount.
• C) consumer surplus exceeds producer surplus by the greatest amount.
• D) the maximum willingness to pay for the last unit of output equals the minimum acceptable price of that unit of output.

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Definitions:

Accounting Events

Transactions or occurrences that result in changes to the financial statements of a company, requiring recognition or disclosure.

Period-To-Period Consistency

An accounting principle ensuring the application of the same accounting methods and principles from one period to the next to ensure financial comparability.

Debits

Accounting entries that increase assets or expenses or decrease liabilities or equity on a company's balance sheet.

Credits

Accounting entries that increase liabilities or equity or decrease assets, representing the opposite effect of debits in the double-entry bookkeeping system.