-Tom and Jerry Are the Only Members of Society

question 46

Multiple Choice

-Tom and Jerry are the only members of society. The table above shows their marginal benefits from defense satellites, a public good. If the marginal social cost of a satellite is $95, the efficient quantity of satellites is

• A) 0.
• B) 1.
• C) 2.
• D) 3.

Understand how market prices affect the production decisions of firms in purely competitive markets.

Recognize the conditions under which a firm should continue production, increase production, or shut down to minimize losses or maximize profits.

Understand the relationship between marginal cost, average variable cost, and market price in the context of purely competitive markets.

Identify the minimum price level at which a firm will produce output.

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Definitions:

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