When Property Rights Are Well Defined and Markets Are Competitive

question 42

Multiple Choice

When property rights are well defined and markets are competitive,

• A) the total gains from trade (the combined area of producer and consumer surplus) are maximized at the market equilibrium.
• B) the market equilibrium is consistent with economic efficiency in that all units creating more benefit than cost have been produced.
• C) the market will automatically move toward the price and quantity where the quantity supplied and the quantity demanded are in balance.
• D) all of the above are true.

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Definitions:

Inflation

The general rise in prices in an economy.

Investment Opportunity

A situation or scenario that offers the potential for investment gains, either through income generation or asset appreciation.

Gross Domestic Product

The total monetary value of all goods and services produced within a country's borders in a specific time period.

International Companies

Businesses that operate across multiple countries, engaging in global trade, production, or services, and often influencing economic patterns worldwide.