-The Figure Above Shows the Market for a Good with an External

question 167

Multiple Choice

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action,the equilibrium quantity is ________ units and the equilibrium price is ________ per unit.

• A) 8; $150
• B) 8; $300
• C) 10; $250
• D) 10; $100
• E) 10; $150

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Definitions:

Marginal Product

The additional output resulting from one more unit of a certain input, keeping other inputs constant.

Monopolistic Distributor

A single seller or distributor in a market that controls a large portion of the market share, limiting competition.

Monopolistic Producer

A market situation where a single producer controls the majority of the market for a particular good or service, restricting competition.

Marginal Cost

The financial implication of manufacturing an additional unit of a product or service.