FIGURE 16-1 -Refer to Figure 16-1.Suppose That the Perfectly Competitive Market with Market

question 104

Multiple Choice

FIGURE 16-1
-Refer to Figure 16-1.Suppose that the perfectly competitive market with no government intervention achieves equilibrium at point A.If the social marginal costs and social marginal benefits are represented by MC₀ and MB₀,respectively,then

• A)the competitive price is too high.
• B)the competitive price is too low.
• C)the competitive quantity is too high.
• D)the competitive quantity is too low.
• E)the competitive price and quantity are consistent with allocative efficiency.

---

Definitions:

British Pounds

The currency of the United Kingdom, also known as sterling.

Currency Exchange

The process of exchanging one form of currency for another, based on current exchange rates.

Euros

The official currency used in 19 of the 27 European Union countries, known as the Eurozone.

Weakens

Describes the decrease in strength or value of an entity, such as currency depreciating in value against others in the foreign exchange market.