Figure 15-6 -Refer to Figure 15-6.To Maximize Total Surplus,which Outcome Would a Surplus,which

question 36

Multiple Choice

Figure 15-6

-Refer to Figure 15-6.To maximize total surplus,which outcome would a benevolent social planner choose

• A)100 units of output and a price of $10 per unit
• B)100 units of output and a price of $20 per unit
• C)120 units of output and a price of $10 per unit
• D)150 units of output and a price of $15 per unit

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Definitions:

Diminishing Marginal Product

The principle that as more of a variable input is added to a fixed input, the additional output produced from each new unit of input will eventually decrease.

Production Function

A production function describes the relationship between inputs used in production and the output generated from those inputs.

Marginal Product

The additional output gained by adding one more unit of a specific input, keeping all other inputs constant.

Profitability

A measure of the ability of a company or a business sector to generate earnings compared to its expenses and other relevant costs incurred during a specific period of time.