From the Viewpoint of Economic Efficiency, When Competitive Forces in an Industry

question 108

Multiple Choice

From the viewpoint of economic efficiency, when competitive forces in an industry are weak, market allocation will often lead to

• A) an output of the product that exceeds the amount consistent with ideal economic efficiency.
• B) an output of the product that is less than the amount consistent with ideal economic efficiency.
• C) an output of the product that equals the amount consistent with ideal economic efficiency.
• D) product prices that are below the cost of production.

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Definitions:

Marginal Social Benefits

The additional benefit to society as a whole from producing or consuming one more unit of a good or service.

Common Resource

A resource like air or water that is not owned by anyone, but its use is shared among a community or the public, often leading to overuse or depletion.

Private Market

A segment of the economic market where transactions occur between private individuals or organizations without significant government intervention.

Marginal Social Benefit

The additional benefit to society from producing or consuming one more unit of a good or service.