Resources Are Considered to Be Misallocated When

question 71

Multiple Choice

Resources are considered to be misallocated when

• A) the market is perfectly competitive.
• B) price exceeds marginal cost.
• C) the social value of an extra unit equals its social cost.
• D) price is equal to average total cost at its lowest value.
• E) economic profits are zero.

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Definitions:

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than competitors.

Knitting

The craft or action of creating fabric by interlocking loops of yarn using needles.

Baking

The process of cooking food by dry heat, typically in an oven.

Division Of Labor

Breaking down the production of a good into separate tasks