Suppose the Government Provides Peanut Butter to Everyone Free of Charge

question 35

Multiple Choice

Suppose the government provides peanut butter to everyone free of charge and everyone consumes it to the point at which he receives no additional satisfaction from another spoonful. According to economics, is this necessarily good?

• A)Yes, because everyone is satisfied.
• B)No, because there might be some cases where the resources used to produce peanut butter could have been better used to produce more of other products.
• C)Yes, because the law of diminishing marginal utility indicates that in order to get the greatest amount of satisfaction from the use of resources, people should consume as much of every good as they can.
• D)Yes, because of the law of supply.

---

Definitions:

Jeep Tours

Organized excursions or adventure trips, often in rugged terrain, using jeeps as the primary mode of transport.

Variable Manufacturing Overhead

Costs in the manufacturing process that vary with the level of production output, such as utilities or raw materials.

Standard Cost

The predetermined cost of manufacturing a product or providing a service, used for budgeting and performance evaluation.

Flexible Budget

A budget that adjusts or varies according to changes in revenue or activity levels.