Use the Figure Below to Answer the Following Questions

question 43

Multiple Choice

Use the figure below to answer the following questions.

Figure 17.3.2
-Figure 17.3.2 shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. A quota that results in the common resource being used efficiently is set at

• A)0 goats.
• B)35 goats.
• C)50 goats.
• D)55 goats.
• E)40 goats.

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Definitions:

Maximize Profit

The process of increasing the difference between the cost of production and the revenue generated from sales to the highest possible level.

Short Run

A period during which at least one factor of production is fixed, limiting the ability to adjust to changing market conditions.

Production

The process of creating goods or services using labor, machinery, and raw materials.

Price Taker

A market participant that accepts prevailing market prices as given, without having the power to influence these prices.