In the Market for DVDs, 500,000 DVDs a Month Are

question 337

Multiple Choice

In the market for DVDs, 500,000 DVDs a month are available. The value people place on the 500,000th DVD a month is less than the marginal social cost of producing it. Resource use

• A) is efficient.
• B) is inefficient.
• C) would be more efficient if people firms would produce more DVDs.
• D) would be more efficient if people would buy more DVDs.

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life.

Equipment

Tangible property or assets, excluding real estate and vehicles, used in the operation of a business to produce goods or services.

Unearned Revenue

Money received by a company for goods or services yet to be delivered or provided, recorded as a liability.

Liability

An obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services, or other yielding of economic benefits in the future.