At Any Quantity at Which the Demand Curve Lies Above

question 31

Multiple Choice

At any quantity at which the demand curve lies above the supply curve,

• A)economic efficiency is achieved
• B)the cost of producing the last unit exceeds its value to some consumer
• C)marginal cost exceeds the market price
• D)the market is Pareto efficient
• E)the value of the last unit to some consumer exceeds the cost of producing it

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Definitions:

Marginal Expenditure Curve

A graph that shows the additional cost incurred by acquiring one more unit of a good or service.

Monopsony

A market situation in which there is only one buyer for a product or service, giving that buyer substantial power over prices.

Rightward Shift

A movement to the right on a graph, indicating an increase in quantity supplied or demanded at a given price.

Subsidy

Payment reducing the buyer’s price below the seller’s price; i.e., a negative tax.