In Evaluating the Degree of Economic Efficiency in a Market

question 88

Multiple Choice

In evaluating the degree of economic efficiency in a market, we can state that the size of the deadweight loss in a market will be smaller

• A)the greater the difference between marginal cost and price.
• B)the smaller the difference between marginal cost and average total cost.
• C)the smaller the difference between marginal cost and price.
• D)the greater the difference between marginal cost and average revenue.

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Definitions:

Legal Dividend

A dividend that a company is legally allowed to distribute as determined by its net income or retained earnings.

Noncumulative Preferred Stock

A type of preferred stock that does not accumulate unpaid dividends; if a dividend is skipped, it is not required to be paid later.

Retained Earnings

The portion of net earnings not distributed as dividends to shareholders but reinvested in the business or kept as a reserve.

Par Value

The face value of a bond or stock as stated by the issuer, which may differ from its market value.