When a Perfectly Competitive,well-Functioning Market Is Not in Equilibrium

question 115

Multiple Choice

When a perfectly competitive,well-functioning market is not in equilibrium:

• A) total surplus is not maximized.
• B) there are no exchanges that can make some better off without someone becoming worse off.
• C) the market is efficient.
• D) All of these are true.

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Definitions:

Elasticity

A measure of the responsiveness of the quantity demanded or supplied of a good or service to a change in one of its determinants, such as price or income.

Taxation

Taxation is the process by which governments finance their expenditure by imposing charges on citizens and corporate entities.

Excise Taxes

Taxes imposed on specific goods, services, or transactions, often including alcohol, tobacco, and gasoline, generally used to discourage consumption or raise revenue.

Elasticity

A measure of how much the quantity demanded or supplied of a good responds to changes in prices, income, or other economic factors.