(Figure: Pancakes and Cereal I) at Point G, the Marginal

question 91

Multiple Choice

(Figure: Pancakes and Cereal I) At point G, the marginal cost of a pancake is 50 cents and the marginal cost of a bowl of cereal is also fifty cents. At this point, consumers are willing to trade 2 bowls of cereal for an additional pancake. Which of the following statements is TRUE?

• A) The economy is not allocating its inputs efficiently.
• B) The economy is not achieving output efficiency because the MRS is less than the MRT.
• C) The economy is achieving output efficiency because the MRT equals 1.
• D) The economy is not achieving output efficiency because the MRS is greater than the MRT.

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Definitions:

Revenue Potential

an estimate of the maximum sales revenue a business can achieve in a given market under current conditions.

Service Firms

Businesses that provide intangible products or services to consumers, as opposed to tangible goods.

Locations

In the context of operations management, it refers to the strategic positioning of facilities like factories or warehouses to optimize logistics and supply chain efficiency.

Ethical Considerations

Moral principles that influence decision-making processes, ensuring actions are conducted with integrity and respect for others.