Question

33. Which of the following statements is true of a perfectly competitive market?

a. At equilibrium, it is possible to make someone better off without making someone else worse off.

b. The equilibrium price in a competitive market efficiently allocates scarce resources to participants.

c. The sum of consumer surplus and producer surplus is not maximized at the equilibrium.

d. The equilibrium price is determined by a few large firms in the market.

34. The concept of the invisible hand suggests that ________.

a. individuals working for self-interest will eventually maximize the well-being of society

b. government intervention is necessary to rectify market imperfections

c. the price mechanism allocates resources only to the people with high income in the country

d. equilibrium in a competitive market is determined independent of demand and supply

35. The following figure illustrates the demand and supply curves for a good.




Refer to the figure above. What is the equilibrium price and quantity of the good?

a. Equilibrium price is $60, equilibrium quantity is 20 units.

b. Equilibrium price is $60, equilibrium quantity is 10 units.

c. Equilibrium price os $80, equilibrium quantity is 30 units.

d. Equilibrium price is $40, equilibrium quantity is 20 units.

36. The following figure illustrates the demand and supply curves for a good.




Refer to the figure above. Which of the following is likely to happen if a price ceiling of $40 is imposed?

a. There will be a shortage of 20 units in the market.

b. There will be a surplus of 10 units in the market.

c. There will be a surplus of 20 units in the market.

d. There will be a shortage of 10 units in the market.

Answer 1

33.

option B is the correct answer i.e. The equilibrium price in a competitive market efficiently allocates scarce resources to participants.

34.

option A is the correct answer i.e. individuals working for self-interest will eventually maximize the well-being of society

35

Equilibrium is the point where Supply and demand curves intersect each other

option A is the correct answer i.e. Equilibrium price is 60, the equilibrium quantity is 20 units.

36

At P = 40

Supply = 10, Demand = 30

So there is a shortage of 20 units

option A is the correct answer i.e. There will be a shortage of 20 units in the market.