If the current allocation of resources in the market for hammers is inefficient,then it must be the case that
A)producer surplus exceeds consumer surplus in the market for hammers.
B)consumer surplus exceeds producer surplus in the market for hammers.
C)the sum of consumer surplus and producer surplus could be increased by moving to a different allocation of resources.
D)the costs that sellers of hammers are incurring could be reduced by moving to a different allocation of resources.

Question

Quizplus · Accepted Answer

If the current allocation of resources in the market for hammers is inefficient, it means that there is a way to produce more hammers or provide them at a lower cost while making buyers better off. This implies that it is possible to increase the total surplus (the sum of consumer surplus and producer surplus) in the market by reallocating resources. Therefore, option C is the best choice. Options A and B are incorrect because the allocation of resources cannot be inefficient if one side of the market is experiencing higher surplus than the other. Option D is also incorrect since the question does not provide information about the costs of sellers and how they can be reduced.

If the Current Allocation of Resources in the Market for Hammers