In the Following Graph, MPC and MSC Represent the Marginal

question 10

Multiple Choice

In the following graph, MPC and MSC represent the marginal private cost and marginal social cost of producing a good respectively. QD represents the demand for the good. Refer to the graph to answer the question. The socially optimum level of output is _____ of the good.

• A) 400 units
• B) 1000 units
• C) 1600 units
• D) 2200 units

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Definitions:

Operating Cycle

The duration of time from the purchase of inventory to the collection of cash from sales, reflecting the efficiency of a company's operations.

Cash Flow Time Line

Graphical representation of the operating cycle and the cash cycle.

Cash Cycles

The process that covers the time span between a company’s outlay of cash for materials and the collection of cash from customers for goods or services sold.

Inventory Period

The average length of time items remain in inventory before being sold, indicating the efficiency of a company's inventory management.