09-05 Explain How Governments Try to Encourage Production of Goods

question 38

Multiple Choice

09-05 Explain how governments try to encourage production of goods and services;such as education;that carry external benefits.
09-18 Providing Subsidies
Added Y axis line.

-The diagram above represents an industry.Assuming that the market structure for this industry is perfect competition,the producer surplus is shown by the area:

• A)BEC
• B)AEC
• C)AFC
• D)BED

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Definitions:

Utility Maximization

The process by which consumers allocate their spending to maximize the total satisfaction or utility received from their available resources.

Utility Maximization

The process by which consumers allocate their income in a way that maximizes their overall satisfaction or utility.

Marginal-Utility Schedules

Tables or graphs showing the relationship between the quantity of a good consumed and the incremental satisfaction (utility) gained from consuming each additional unit.

Utility Maximization

An economic principle where consumers attempt to get the greatest satisfaction possible from their available resources.