Question
In: Economics
A deadweight loss: a)can be large in a perfectly competitive market. b)is a reduction in aggregate...
A deadweight loss:
a)can be large in a perfectly competitive market.
b)is a reduction in aggregate surplus below its maximum possible value.
c)is independent the amount produced and consumed.
d)is equal to the difference between total willingness to pay and the total avoidable cost of production.
Solutions
Expert Solution
Correct : b)is a reduction in aggregate surplus below its maximum possible value.
Deadweight loss results when less than efficient output is produced. This is a decrease in aggregate surplus. Some of producer surplus and consumer surplus get lost.
Rahul Sunny answered 2 years agoRelated Solutions
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There are many distinct characteristics that classify a market as Perfectly Competitive including: Very large number...
There are many distinct characteristics that classify a market
as Perfectly Competitive including:
Very large number of firms
Homogenous products
Entry and exit into the market free of barriers
Perfect Information
Individual firms are price takers
Long run economic profits will be zero
Instructions
Given these characteristics of a perfectly competitive market,
select one of the characteristics listed. In your
post:
Fully explain what that characteristic means and what its
importance is to classifying a market as perfectly competitive.
If...
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