A Consumer Values a Car at $30,000 and a Producer

question 8

Multiple Choice

A consumer values a car at $30,000 and a producer values the same car at $20,000.If the transaction is completed at $24,000,the transaction will not take place if:

• A)The tax is equal to the seller surplus
• B)The tax is smaller than the total surplus
• C)The tax is larger than the total surplus
• D)The tax is smaller than the buyer surplus

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Definitions:

Semistrong-form Efficiency

A hypothesis that asserts the market price of securities already reflects all publicly available information, making it hard to achieve higher returns.

Weak-form Efficiency

A market efficiency theory suggesting that past stock prices and volume data do not affect stock prices and thus cannot predict future stock movements.

Positive-earnings Surprises

Situations where the reported earnings of a company exceed the expected earnings, often leading to a positive reaction in the stock market.

Overly Optimistic

This term refers to an excessive belief in the favorable outcomes of events or conditions, often disregarding the likelihood of negative outcomes.