Can the Market System Lead to an Efficient Outcome in a Market

question 22

Multiple Choice

Can the market system lead to an efficient outcome in a market for a good like ice cream cones

• A)no, because based on the market system alone, an inefficient number of ice cream cones will be produced
• B)yes, because at the market equilibrium, the sum of producer surplus and consumer surplus is minimized
• C)yes, because price adjusts to determine the supply and demand of the ice cream cones and determine the market equilibrium
• D)no, because the price established in the market will not reflect the true value of ice cream cones to consumers

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Definitions:

Intellectual Property

Intangible property that is the product of one’s mind and not one’s hands.

Corporate Stocks

Equity investments representing ownership in a corporation, allowing shareholders to claim on assets and earnings.

Real Estate

Property consisting of land and the buildings on it, along with its natural resources.

Insurable Interest

A stake in the value of an entity or event for which an insurance policy is purchased to mitigate the risk of loss.