Exhibit 3A-1 Comparison of Market Efficiency and Deadweight Loss

question 3

Multiple Choice

Exhibit 3A-1 Comparison of Market Efficiency and Deadweight Loss As shown in Exhibit 3A-1, if the market price falls from $2.00 to $1.00, then area ____ appears.

• A)ABEFD
• B)ABEC
• C)EGF
• D)BEF

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Definitions:

Unit Selling Price

The price at which a single unit of a product is sold.

Budgeted Sales

Projected sales for a future period, often used for planning and managing resources and setting goals.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, which is carried over from the end of the previous period.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus net purchases minus cost of goods sold.