If the Current Allocation of Resources in the Market for Wallpaper

question 56

Multiple Choice

If the current allocation of resources in the market for wallpaper is efficient,then it must be the case that

• A)producer surplus equals consumer surplus in the market for wallpaper.
• B)the market for wallpaper is in equilibrium.
• C)on the last unit of wallpaper that was produced and sold,the value to buyers exceeded the cost to sellers.
• D)All of the above are correct.

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Definitions:

Tax Revenue

The financial gains obtained by governments from tax collection.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is unachievable.

Excess Burden

Excess Burden, also known as deadweight loss, is the cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium.

Nonneutral Tax

A tax that impacts differently on different types of economic activities, influencing the allocation of resources.