Refer to the Diagram

question 22

Multiple Choice

Refer to the diagram. If actual production and consumption occur at Q1,

• A) efficiency is achieved.
• B) consumer surplus is maximized.
• C) an efficiency loss (or deadweight loss) of b + d occurs.
• D) an efficiency loss (or deadweight loss) of e + d occurs.

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Definitions:

Margin

The difference between the selling price of a product and its cost, typically expressed as a percentage of the selling price.

Turnover

The total sales made by a company in a specific period, or the rate at which inventory is sold and replaced.

Return On Investment

Return on Investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment compared to its cost.

Residual Income

The income that remains after subtracting all required costs of capital from operating profit.