Suppose the Market-Equilibrium Quantity of Good X Is 5,000 Units

question 490

Multiple Choice

Suppose the market-equilibrium quantity of good x is 5,000 units and the socially-optimal quantity of good x is 4,000 units. Then

• A)the production of good x imposes external costs on society.
• B)the private value of good x exceeds the private cost of good x when 5,000 units are produced.
• C)the private cost of good x exceeds the private value of good x when 5,000 units are produced.
• D)the social cost of good x exceeds the private value of good x when 4,000 units are produced.

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Definitions:

Discarding

The process of eliminating or getting rid of something that is no longer useful or required.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Conjunction Fallacy

A logical fallacy where people incorrectly judge the probability of the conjunction of two events to be more likely than the probability of either event alone.

Gambler's Fallacy

A cognitive bias where an individual erroneously believes that past events will affect the likelihood of future independent events, often seen in probability contexts.