Which of the Following Statements Is True

question 1

Multiple Choice

Which of the following statements is true?

• A) As we consume more of a good,utility will increase even if the good is subject to diminishing marginal utility.
• B) As we consume more of a good,utility will increase unless the good is subject to diminishing marginal utility.
• C) Marginal utility is just another name for utility.
• D) We cannot rank utility from two different consumption bundles.

Differentiate between private and social costs, and private and social values.

Identify the conditions for social optimality in the presence of externalities.

Calculate the optimal level of subsidy or tax required to achieve social optimality.

Interpret graphical representations of markets with externalities.