which statement is trueIn the absence of market power and externalities, efficiency is achieved in a market when the sum of producer surplus and consumer surplus is maximized.The benefit received by sellers in a market is measured by producer surplus and producer surplus is calculated as the amount sellers receive for their product minus the cost of production.In a market, the marginal buyer is the buyer who would be the first to leave the market if the price were any higher.Moving production from a high-cost producer to a low-cost producer will decrease total surplus.Suppose the United States changed its laws to allow for the legal sale of a kidney and the government allowed a free market in organs for transplant then there would be a decrease in the price of a kidney and an increase in the shortage of kidneys for transplant.Total surplus in the market is the summation of consumer surplus and producer surplus and it is maximized at the market equilibrium in the absence of market power and externalities.If a good is not being produced by sellers with the lowest cost, then the market reflects inefficiency in the allocation of resources.Welfare economics deals with how the allocation of resources affects economic well-being.The willingness to pay is a measure of how much the buyer values the good.The marginal seller is the seller who would leave the market first if the price were any higher.

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Answered: which statement is true In the absence…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.8P

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which statement is true

In the absence of market power and externalities, efficiency is achieved in a market when the sum of producer surplus and consumer surplus is maximized.
The benefit received by sellers in a market is measured by producer surplus and producer surplus is calculated as the amount sellers receive for their product minus the cost of production.
In a market, the marginal buyer is the buyer who would be the first to leave the market if the price were any higher.
Moving production from a high-cost producer to a low-cost producer will decrease total surplus.
Suppose the United States changed its laws to allow for the legal sale of a kidney and the government allowed a free market in organs for transplant then there would be a decrease in the price of a kidney and an increase in the shortage of kidneys for transplant.
Total surplus in the market is the summation of consumer surplus and producer surplus and it is maximized at the market equilibrium in the absence of market power and externalities.
If a good is not being produced by sellers with the lowest cost, then the market reflects inefficiency in the allocation of resources.
Welfare economics deals with how the allocation of resources affects economic well-being.
The willingness to pay is a measure of how much the buyer values the good.
The marginal seller is the seller who would leave the market first if the price were any higher.

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