Assume That the Supply Curve Is Horizontal Because Marginal Cost

question 32

Multiple Choice

Assume that the supply curve is horizontal because marginal cost is constant at $10.John,Robert,and Jimmy each value one compact disc at $20 but only Jimmy and John value a second compact disc (Jimmy at $5 and John at $15) .If a social planner dictates that two compact discs be produced and distributed to John,Robert,and Jimmy,then even if the compact discs are allocated based on demand,this market will lose out on $___ of value.

• A) $5.
• B) $10.
• C) $15.
• D) There will be no lost value as five compact discs is the efficient level.

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Definitions:

Spina Bifida

A birth defect where there is incomplete closing of the spine and membranes around the spinal cord during early pregnancy.

Herniated Disk

A condition where a disk in the spine slips or ruptures, potentially pressing on nearby nerves and causing pain or other symptoms.

Ethmoidal

Pertaining to the ethmoid bone, a spongy, cubical bone contributing to the structure of the nasal cavity and the orbits of the eyes.

Sphenoidal

Pertaining to the sphenoid bone, often referencing the sphenoidal sinus located within this bone.