When a Market Is Efficient

question 46

Multiple Choice

When a market is efficient:

• A) there is no exchange that can make anyone better off without someone becoming worse off.
• B) a central planner must be involved.
• C) total surplus is zero.
• D) an increase in price will reduce the deadweight loss.

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Definitions:

Currencies

Forms of money that are issued by governments and used as a medium of exchange for goods and services in economic transactions.

Interest Rates

The percentage charged on the total amount borrowed or earned, reflecting the cost of borrowing or the yield on investments.

Commodities

Raw materials or primary agricultural products that can be bought and sold.

Futures Exchange

A Futures Exchange is a central marketplace where people can trade standardized futures contracts; that is, contracts to buy or sell assets at a future date at an agreed-upon price.