For Markets Operating at Quantities Lower Than the Equilibrium Price

question 21

Multiple Choice

For markets operating at quantities lower than the equilibrium price and quantity for a perfectly competitive market:

• A)the outcome is efficient.
• B)total surplus is increased.
• C)consumer surplus is always increased.
• D)None of these statements is true.

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Definitions:

Consumer Surplus

The gap between the total sum consumers are prepared and financially able to spend on a good or service and the sum they actually spend.

Legal

Pertaining to or conforming to the laws of a country or the legality of a situation or activity.

Efficient Output Level

The quantity of output at which a firm's average total cost is minimized.

Units

Basic quantities or measurements used as a standard to express the amount, level, or size of something.