Figure 7-20 -Refer to Figure 7-20.The Equilibrium Allocation of Resources Is

question 39

Multiple Choice

Figure 7-20

-Refer to Figure 7-20.The equilibrium allocation of resources is

• A) efficient because total surplus is maximized at the equilibrium.
• B) efficient because consumer surplus is maximized at the equilibrium.
• C) inefficient because consumer surplus is larger than producer surplus at the equilibrium.
• D) inefficient because total surplus is maximized when 10 units of output are produced and sold.

---

Definitions:

Average Cost

The total cost of production divided by the quantity of output produced; it's a measure of how much it costs, on average, to produce one unit of output.

Deadweight Loss

A situation in economics where the total of consumer and producer surplus is not maximized due to factors like taxes or subsidies.

Monopoly Output

The quantity of goods or services produced and offered for sale by a monopolist, set to maximize profits under conditions of limited competition.

Competitive Output

The level of output at which a firm in a competitive market maximizes its profits, determined by the intersection of the industry's supply and demand curves.