Question

33. Efficiency is attained when a. total surplus is maximized. b. producer surplus is maximized. c. all resources are being used. d. consumer surplus is maximized and producer surplus is minimized. 34. A price floor is binding when it is set a. above the equilibrium price, causing a shortage. b, above the equilibrium price, causing a surplus. c. below the equilibrium price, causing a shortage. d. below the equilibrium price, causing a surplus. 35. Which of the following is not a determinant of the price elasticity of demand for a good? a. the time horizon b. the availability of substitutes for the good c. the definition of the market for the good d. All of the above are determinants of price elasticity

Answer 1

33) (a) total surplus is maximised

When total surplus is maximised, then efficiency is attained. Thus, option a is correct.

34) (b) above the equilibrium price, causing a surplus

A binding price floor occurs when the government sets a required price on a good or goods at a price above equilibrium. Because the government requires that prices not drop below this price, that price binds the market for that good.

35) (d) all of the above are determinants

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