If the Marginal Social Benefit of Consuming a Product Exceeds

question 83

Multiple Choice

If the marginal social benefit of consuming a product exceeds the marginal social cost of producing it, social welfare is

• A)increased by reducing output
• B)decreased by expanding output
• C)unchanged by expanding or reducing output
• D)increased by expanding output
• E)maximized

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Definitions:

Capital Stock

The total representation of a company's or country's machinery, buildings, and other physical assets used in production.

Price Level

A measure of the average prices of goods and services in the economy, often compared over time to assess inflation or deflation.

Long-Run Aggregate Supply Curve

A vertical line representing the real output of goods and services that an economy can produce when it is fully employed, regardless of the level of demand.

Minimum Wage

The lowest legal remuneration that employers are allowed to pay their workers, aimed at protecting workers from unduly low pay.