The Marginal Cost of a Good or Service

question 35

Multiple Choice

The marginal cost of a good or service

• A) graphs as a positively sloped curve, so it cannot be derived from the production possibilities frontier, which is downward sloping.
• B) can be derived from the production possibilities frontier.
• C) can be calculated from the marginal benefit of that good or service.
• D) decreases as more of the good or service is produced.
• E) None of the above answers is correct.

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Definitions:

Equilibrium Price

The cost at which the volume of goods available equals the volume sought by consumers.

Equilibrium Quantity

The amount of products or services available and sought after at the balance price.

Consumer Surplus

The divergence between the total price consumers are prepared to pay for a good or service and the actual price paid.

Producer Surplus

The difference between the amount producers are willing to supply a good for and the actual amount received by them when they make the sale.