-In the Above Figure, When 2,000 Bicycles Are Produced Each

question 100

Multiple Choice

-In the above figure, when 2,000 bicycles are produced each month, we can see that

• A) the marginal benefit from another bicycle is greater than the marginal cost of another bicycle.
• B) more bicycles should be produced to reach the allocatively efficient level of output.
• C) the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost.
• D) Both answers A and B are correct.

---

Definitions:

Long-Run Supply

A market condition reflecting the total output of goods and services providers are willing and able to produce, considering all inputs are variable.

Short Run

Refers to a period in which at least one input is fixed, limiting the capacity of the economy or firm to adjust to changes in demand.

Long Run

A period in which all inputs can be adjusted by firms, allowing for full adjustment to market conditions or changes in production technology.

Break-Even Point

The juncture where total expenses match total income, yielding neither profit nor loss.