Economic Efficiency in a Free Market Occurs When

question 122

Multiple Choice

Economic efficiency in a free market occurs when

• A)consumer surplus is maximized.
• B)producer surplus is maximized.
• C)the sum of consumer surplus and producer surplus is maximized.
• D)price is as low as possible.

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Definitions:

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, an indicator of inflation.

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation), reflecting the real value of goods and services produced.

Short-Run Economic Recession

A brief period of economic decline characterized by reduced industrial production, trade, and lowered levels of employment.

Long-Run Aggregate-Supply Curve

A vertical curve representing the real output of goods and services that an economy can produce when resources are fully employed, irrespective of the overall price level, over time.