which statement is trueIn the absence of market power and externalities, efficiency is achieved in a market when the sum of producer surplus and consumer surplus is maximized.The benefit received by sellers in a market is measured by producer surplus and producer surplus is calculated as the amount sellers receive for their product minus the cost of production.In a market, the marginal buyer is the buyer who would be the first to leave the market if the price were any higher.Moving production from a high-cost producer to a low-cost producer will decrease total surplus.Suppose the United States changed its laws to allow for the legal sale of a kidney and the government allowed a free market in organs for transplant then there would be a decrease in the price of a kidney and an increase in the shortage of kidneys for transplant.Total surplus in the market is the summation of consumer surplus and producer surplus and it is maximized at the market equilibrium in the absence of market power and externalities.If a good is not being produced by sellers with the lowest cost, then the market reflects inefficiency in the allocation of resources.Welfare economics deals with how the allocation of resources affects economic well-being.The willingness to pay is a measure of how much the buyer values the good.The marginal seller is the seller who would leave the market first if the price were any higher.

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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which statement is true

In the absence of market power and externalities, efficiency is achieved in a market when the sum of producer surplus and consumer surplus is maximized.
The benefit received by sellers in a market is measured by producer surplus and producer surplus is calculated as the amount sellers receive for their product minus the cost of production.
In a market, the marginal buyer is the buyer who would be the first to leave the market if the price were any higher.
Moving production from a high-cost producer to a low-cost producer will decrease total surplus.
Suppose the United States changed its laws to allow for the legal sale of a kidney and the government allowed a free market in organs for transplant then there would be a decrease in the price of a kidney and an increase in the shortage of kidneys for transplant.
Total surplus in the market is the summation of consumer surplus and producer surplus and it is maximized at the market equilibrium in the absence of market power and externalities.
If a good is not being produced by sellers with the lowest cost, then the market reflects inefficiency in the allocation of resources.
Welfare economics deals with how the allocation of resources affects economic well-being.
The willingness to pay is a measure of how much the buyer values the good.
The marginal seller is the seller who would leave the market first if the price were any higher.

Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

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