Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss

question 37

Multiple Choice

Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss As shown in Exhibit 3A-2, if the market price falls from P₂ to P₃, then:

• A)total surplus increases.
• B)deadweight loss decreases.
• C)overproduction increases.
• D)underproduction decreases.

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Definitions:

Category Type

A classification that groups items or transactions with similar characteristics for organizational or reporting purposes.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

Owners' Equity

The residual interest in the assets of an entity after deducting liabilities, representing the owners' claims on the business assets.

Liabilities

Liabilities represent a company's financial debts or obligations that arise during the course of business operations, to be repaid at a later date.