Allocative Efficiency Occurs Whenever

question 84

Multiple Choice

Allocative efficiency occurs whenever

• A)consumer surplus is maximized.
• B)it is impossible to produce a net benefit for society by changing the combination of goods and services produced.
• C)firms have maximized their profits.
• D)it is impossible to make someone in society better off without making someone else worse off.

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Definitions:

Cournot Duopoly

A model of competition in which two firms choose their output levels strategically, assuming the output of the other, aiming to maximize profit.

Linear

Describing a relationship or function that can be graphically represented as a straight line, indicating a constant rate of change.

Reaction Functions

Reaction functions describe how one player's optimal strategy depends on the strategies of other players in a strategic game or economic model.

Linear Demand

A demand model in which the relationship between quantity demanded and price is a straight line, indicating a constant rate of change in quantity demanded for changes in price.