The Desirable Level of Output in a Perfectly Competitive Market

question 70

Multiple Choice

The desirable level of output in a perfectly competitive market if there exists a detrimental externality is

• A)the point at which MSC curve intersects the marginal revenue curve.
• B)the point at which MSC intersects the MPC.
• C)the point at which MSC intersects MPC.
• D)the point at which marginal revenue curve intersects the MPC.

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Definitions:

Nominal Wages

The amount of money paid to an employee before adjustments for factors like inflation, not reflecting the real purchasing power of the income.

Real Wages

Wages adjusted for inflation, representing the actual purchasing power of income received by workers.

Nominal Wage

The wage earned by a worker expressed in current dollars, without adjustments for inflation.

Price Index

An index number that shows how the weighted-average price of a “market basket” of goods changes over time relative to its price in a specific base year.