In the absence of externalities, the perfectly competitive market maximizes economic surplus when

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BlackTom AI · Accepted Answer

To evaluate the options, we start from the core idea of a perfectly competitive market with no externalities: economic surplus (total benefits minus total costs) is maximized when resources are allocated where marginal benefit equals marginal cost (MB = MC).
Option 1: 'the market price is above the equilibrium price.' When price is above equilibrium, quantity supplied exceeds quantity demanded, creating a surplus. This misallocates resources and reduces overall surplus, so this is not the condition for maximizing surplus.
Option 2: 'the market price is below the equilibrium price.' A price below equilibrium causes a shortage: quantity demanded exceeds quantity supplied. This imbalance leads to underallocation and reduces total surplus, making this option false.
Option 3: 'the market is at equilibrium.' At equilibrium, MB equals MC across the units traded, and no unexploited gains from trade remain. This condition aligns with the standard result that, absent externalities, competitive markets maximize economic surplus. It is the correct characterization of the efficient outcome in this setup.
Option 4: 'for the last unit produced, marginal benefit exceeds marginal cost.' If MB > MC for the last unit, production would continue to increase until MB = MC; at the actual efficient point, MB = MC for the marginal unit. Therefore stating that MB exceeds MC for the last unit implies underestimation of the optimal output and is not the condition for maximum surplus.
Option 5: 'the total benefit from all units produced equals the total costs of all units produced.' While total surplus is maximized when MB = MC for each unit, the condition that total benefits exactly equal total costs does not correctly describe the distribution of surplus across units. In fact, at efficient output, total benefits exceed total costs by the maximum possible amount, not merely equalize them. Hence this statement is inaccurate.

AP Economics-Hillebrand Quiz Micro 6.1-6.3- Requires Respondus LockDown Browser

In the absence of externalities, the perfectly competitive market maximizes economic surplus when

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AP Economics-Hillebrand Quiz Micro 6.1-6.3- Requires Respondus LockDown Browser

In the absence of externalities, the perfectly competitive market maximizes economic surplus when

查看解析

登录即可查看完整答案

类似问题

What is the equilibrium quantity before the tax?

Equilibrium in the market occurs when

Find the equilibrium price and quantity in this market. Price = [Fill in the blank] Quantity = [Fill in the blank]

Table 4-6 ​ Price (Dollars per unit) Quantity Demanded (Units) Quantity Supplied (Units) 15 10 60 12 20 45 9 30 30 6 40 15 3 50 0 ​ ​ Refer to Table 4-6. The equilibrium price and quantity, respectively, are

Price $ Qd Qs 1 90 20 2 70 30 3 50 50 4 45 80 5 43 120 3. Using the table above, the equilibrium quantity is

Price $ Qd Qs 1 90 20 2 70 30 3 50 50 4 45 80 5 43 120 2. Using the table above, the equilibrium price is

更多留学生实用工具

希望你的学习变得更简单

Table 4-6 Price (Dollars per unit) Quantity Demanded (Units) Quantity Supplied (Units) 15 10 60 12 20 45 9 30 30 6 40 15 3 50 0 Refer to Table 4-6. The equilibrium price and quantity, respectively, are