-The Figure Above Shows the Private Marginal Cost Curve, the Social

question 96

Multiple Choice

-The figure above shows the private marginal cost curve, the social marginal cost curve and the market demand curve. If a constant per unit tax is imposed that generates an efficient allocation of resources, then the quantity produced is

• A) Q2.
• B) greater than Q3.
• C) Q1.
• D) Q3.

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Definitions:

Total Contribution Margin

The total amount remaining from sales revenue after all variable costs are deducted, used to cover fixed costs and profit.

Margin of Safety

The difference between actual sales and the break-even point, indicating the amount by which sales can drop before the business incurs a loss.

Capital Intensive

A business process or industry that requires large amounts of money and financial resources to produce a good or service.

Break-even Point

The juncture where the sum of all expenses matches the sum of all income, leading to neither a profit nor a deficit.