When Underproduction Occurs

question 95

Multiple Choice

When underproduction occurs,

• A) producers gain more surplus at the expense of consumers.
• B) marginal cost is greater than marginal benefit.
• C) consumer surplus increases to a harmful amount.
• D) there is a deadweight loss that is borne by the entire society.
• E) the deadweight loss harms only consumers.

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Definitions:

Readily Used

implies resources or items that are easily accessible and can be immediately employed for a specific purpose or need.

Great Recession

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Opportunity Cost

The concept of opportunity cost represents the benefits a person or business misses out on when choosing one alternative over another.

Speculative Motive

The desire to hold cash or assets in anticipation of making gains based on future price movements.