If the Marginal Benefit of a Hot Dog Is Greater

question 286

Multiple Choice

If the marginal benefit of a hot dog is greater than its marginal cost,then to increase efficiency,

• A) more hot dogs should be produced.
• B) fewer hot dogs should be produced.
• C) nothing should be done if the marginal benefit is greater than the marginal cost by the maximum amount because in this case the efficient quantity of hot dogs is being produced.
• D) production should be halted.
• E) More information is needed about the price of a hot dog in order to determine if production should be increased, decreased, or not changed.

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Definitions:

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices.

Complements

Goods that are often used together where an increase in the demand for one leads to an increase in the demand for the other.

Quantity Demanded

The specific amount of a good or service that consumers are willing and able to buy at a given price within a certain period of time.

Price Decrease

A reduction in the cost of goods or services, which can affect demand, supply, and economic equilibrium.