When a Market Is in Equilibrium and the Marginal Consumer

question 267

Multiple Choice

When a market is in equilibrium and the marginal consumer values a commodity at less than the social cost of producing it,then

• A)at market equilibrium the demand curve lies below the social cost curve.
• B)reducing production to a level below the equilibrium level could possibly raise total economic well-being.
• C)the equilibrium price is higher than necessary to insure maximum economic well-being.
• D)Both a and b are correct.

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Definitions:

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A mental framework or predisposition to approach problems in a specific way, often hindering the ability to find alternative solutions.

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