When a Competitive Market Achieves Allocative Efficiency, It Implies That

question 35

Multiple Choice

When a competitive market achieves allocative efficiency, it implies that

• A) the marginal benefit of having the product is greater than the marginal cost.
• B) the buyers are getting the maximum consumer surplus from the product.
• C) the combined consumer and producer surplus is maximized.
• D) the quantity demanded is lower than the quantity supplied.

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Definitions:

Private Spending

Expenditures made by individuals, households, and businesses in the private sector, excluding government spending.

Monetary Policy

Economic strategies and decisions made by a central bank or government agency regarding the supply of money and levels of interest rates in an economy.

Fiscal Policy

Governmental policies concerning taxing and spending that are intended to influence economic conditions, including aggregate demand, inflation, and unemployment.

Consumption

The act of using up goods and services by individuals or groups, often analyzed in the context of economic activities and impacts on well-being.