-In the Above Figure, Suppose the Quantity Produced Is 40

question 7

Multiple Choice

-In the above figure, suppose the quantity produced is 40. Then

• A) the marginal social cost of the 40th unit is $1.
• B) the willingness to pay for the 40th unit is $2, the equilibrium price.
• C) production is not efficient because MSB > MSC.
• D) production is not efficient because MSC>MSB.

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Definitions:

Direct Materials

Raw materials directly used in the manufacturing of a product, which can be directly attributed to the finished product.

Fixed Overhead

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, which are necessary for a business's operations regardless of output.

Variable Overhead

Costs that vary with production volume, such as utilities or materials used in production processes.

Fixed Overhead

A set of costs that do not vary with production volume, including salaries, rent, and insurance.