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- Subject
- Surpluseconomics-mcqs › surplus
- Published
- 29 May 2019
- Last updated
- 28 May 2026
Explanation
When buyers behave rationally and no market failures exist, free market outcomes are efficient. While they also maximize total surplus, the key point is efficiency, which makes option A the correct choice.
More Surplus MCQs
Practice related questions from the same subject.
- 1.When a market produces an externality, how effective are free market solutions?
- 2.When a producer possesses market power and can affect the product's price, how do free market outcomes typically perform?
- 3.According to Adam Smith's concept of the invisible hand, what is the result of a competitive market equilibrium?
- 4.If a new bicycle is priced at Rs 300, Natalie values it at Rs 400, and the production cost for the seller is Rs 200, what is the total surplus when Natalie purchases the bicycle?
- 5.What does the seller’s cost of production represent?
- 6.What happens if a well-intentioned social planner decides to produce less than the market equilibrium quantity of a good?
- 7.Which area represents the producer surplus on a supply and demand graph?
- 8.What is the effect on consumer surplus when the price of a product rises, assuming the demand curve remains unchanged?
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