For This Question,assume That Expectations of P and a Are

question 16

Multiple Choice

For this question,assume that expectations of P and A are correct.Now suppose that there is a 4% increase in A.Given this information,which of the following will occur?

• A)The PS relation will shift up by 4%.
• B)The WS relation will shift up by less than 4%.
• C)The WS relation will shift down by 4%.
• D)The PS relation will shift down by 4%.

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Definitions:

Marginal Social Benefit

The additional benefit to society from producing one extra unit of a good or service.

Marginal Social Cost

The complete expense incurred by society when one more unit of a product or service is created, encompassing both personal expenses and any external factors.

Marginal Benefit

The enhancement in satisfaction or benefit achieved by using or producing another unit of a product or service.

External Costs

Costs of an economic activity that are not borne by the participants in the activity but are imposed on others, such as pollution.