When Economists Describe a Market for a Specific Product as Being

question 89

Multiple Choice

When economists describe a market for a specific product as being economically "efficient," what do they mean?

• A)Production techniques are such that resources are used in the most technologically efficient manner.
• B)Consumption of the product is such that economic surplus is maximized.
• C)Production of the product is such that economic surplus is maximized.
• D)The quantity of the product produced and consumed is such that the economic surplus is maximized.
• E)There are no price controls in place in that market.

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, expressed as a percentage change.

Demand Function

A mathematical expression that shows the relationship between the quantity of a good consumers are willing to buy and its price.

Price Elasticity

The measure of how much the quantity demanded or supplied of a good changes in response to a change in its price.

Price Doubles

A situation where the price of a good, service, or commodity increases to twice its previous level, affecting supply and demand dynamics.