The Marginal Social Cost of Bread Exceeds the Marginal Social

question 23

Multiple Choice

The marginal social cost of bread exceeds the marginal social benefit at the current weekly output.Therefore,

• A)the marginal net benefit of bread is positive.
• B)the output of bread is efficient.
• C)a reduction in weekly output of bread is necessary to achieve efficiency.
• D)an increase in weekly output of bread is necessary to achieve efficiency.

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Definitions:

Marginal Products

The additional output resulting from the increase of one unit of a specific input, holding all other inputs constant.

Separating Equilibrium

Separating equilibrium refers to a situation in a market, often under conditions of asymmetric information, where different types of people choose different strategies, revealing their type.

Pooling Equilibrium

A situation in a market where all types of customers receive the same offer or treatment from a seller because the seller cannot distinguish between different types of customers.

Microeconomics

The branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of limited resources.