Efficiency
.pdf
School
University of Maryland**We aren't endorsed by this school
Course
ECON 200
Subject
Economics
Date
Dec 18, 2024
Pages
6
Uploaded by DeanMorningKingfisher41
Suppose the market below is in equilibrium. The government is considering setting the price in this market below S5 to benefit consumers. If the government does this, what will happen to tota surplus? $ A. Total surplus will increase “UA y B. Total surplus will (> decrease C. Total surplus might 5 increase or A 1 decrease NL\N S Efficiency = Maximum Total Surplus Deadweight Loss = Given the current market conditions, the/efficient outcome is the one - & * Deadweight loss ='Surplus “lost” (or surplus unobtained) that maximizes total surplus. * Deadweight loss exists if total surplus could be increased. = The equilibrium in a perfectly competitive market is efficient. Vol al] worke ate porfrly (opeTitie of well = funclioning
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