When the Blue Ocean Surfboard Company Lowered the Price of Surfboards

question 50

Multiple Choice

When the Blue Ocean Surfboard Company lowered the price of surfboards by 20 percent, it sold 10 percent more surfboards. What is the price elasticity coefficient for surfboards?

• A) 0.5
• B) 1
• C) 2
• D) 20

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Definitions:

Marginal Social Benefit

The additional benefit to society from consuming one more unit of a good.

Marginal Cost

The financial outlay required to produce an additional product unit.

Socially Optimal

The socially optimal point is where the societal benefits of consuming a good or service equal the societal costs of producing it, leading to an efficient allocation of resources.

Marginal Benefit

The increase in utility or enjoyment an individual gets by consuming an additional unit of a good or service.