Exhibit 3-3 Demand Curves

question 7

Multiple Choice

Exhibit 3-3 Demand curves
-Assume that consumers expect the price of gasoline to rise sharply in the future. Which of the graphs in Exhibit 3-3 depicts this effect?

• A) Graph A.
• B) Graph B.
• C) Graph C.
• D) Graph D.

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Definitions:

Marginal Social Benefit

The additional benefit to society from consuming or producing one more unit of a good or service.

Marginal Social Cost

Marginal social cost is the total cost to society of producing one additional unit of a good or service, including both private costs and any externalities.

Common Resources

Resources that are accessible to all members of a society but are limited in availability and can be depleted by overuse.

Private Markets

Markets where transactions occur between private entities without significant government intervention, focusing on the exchange of goods and services among individuals and businesses.