165) Total surplus is the area

Answer is:

below the demand curve and above the supply curve

Micro Economics MCQ (GK Set-1) with Answers

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166) An increase in the price of a good along a stationary supply curve

Answer is:

increases producer surplus

167) Adam Smith’s "invisible hand" concept suggests that a competitive market outcome

Answer is:

maximizes total surplus

168) In general, if a benevolent social planner wanted to maximize the total benefits received by buyers and sellers in a market, the planner should

choose a price below the market equilibrium price

allow the market to seek equilibrium on its own

choose any price the planner wants because the losses to the sellers (buyers) from any change in price are exactly offset by the gains to the buyers (sellers).

choose a price above the market equilibrium price

Answer is:

allow the market to seek equilibrium on its own

169) If buyers are rational and there is no market failure,

Answer is:

free market solutions are efficient and free market solutions maximize total surplus

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