-Suppose a factory can be designed to produce either trucks or cars. The figure above shows the marginal cost and marginal benefit of producing trucks in terms of the forgone cars.
a) What is the marginal benefit of the 25th truck?
b) What is the marginal cost of the 25th truck?
c) Should the 25th truck be produced? Why or why not.
d) What is the marginal benefit of the 75th truck?
e) What is the marginal cost of the 75th truck?
f) Should the 75th truck be produced? Why or why not?
g) What is the allocatively efficient quantity of trucks?
Definitions:
Exchange of Goods
The act of giving one item of value in return for another, especially in a commercial context.
Market Failures
Occur when the market does not allocate resources efficiently on its own, leading to a loss of economic welfare.
Government Role
The activities undertaken by a government, including regulation, taxation, and public services provision, to guide and support the economy.
Economic Profits
The surplus after all costs, including opportunity costs, have been subtracted from total revenues.
Q8: The loss to society resulting from a
Q29: Jess owns a sandwich shop.The price of
Q38: The proposition that people should pay taxes
Q51: Suppose that apartments rent for $1,300 a
Q151: The percentage of an additional dollar that
Q181: When each taxpayer pays the same average
Q216: The marginal benefit of the first hotdog
Q218: If the market for bicycles is efficient,then<br>A)
Q258: A demand curve can be interpreted as<br>A)
Q312: If the cross elasticity of demand for