In a Competitive Market,an Efficient Allocation of Resources Is Characterized

question 11

Multiple Choice

In a competitive market,an efficient allocation of resources is characterized by

• A)a price greater than the marginal cost of production.
• B)the possibility of further mutually beneficial transactions.
• C)the largest possible sum of consumer and producer surplus.
• D)a value of consumer surplus equal to that of producer surplus.

---

Definitions:

Indifference Curve

A graph that shows different combinations of two goods among which a consumer is indifferent, implying the same level of utility for each combination.

Hicks Version

Refers to John Hicks' adaptation of consumer demand theory, particularly in relation to indifference curves and utility maximization.

Substitution Effect

A modification in buying behavior triggered by a change in goods' comparative prices, prompting people to switch from one product to another.

Indifference Curve

A graph representing combinations of goods that provide the same level of satisfaction to a consumer.