When Every Good or Service Is Produced Up to the Point

question 219

Multiple Choice

When every good or service is produced up to the point where the last unit provides ________, allocative efficiency occurs.

• A)a marginal benefit to society equal to the marginal cost of producing it
• B)a marginal benefit to society greater than the marginal cost of producing it
• C)a marginal benefit to society less than the marginal cost of producing it
• D)a marginal benefit to society equal to zero

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Definitions:

Cost of Equity

The return that shareholders require for investing in a company’s equity.

Return on Assets

A financial ratio that indicates how profitable a company is relative to its total assets by dividing net income by total assets.

Return on Debt

A measure of how much profit a company generates for every dollar of debt, indicating the efficiency of using borrowed funds.

Total Equity

The net value of a company, determined by subtracting total liabilities from total assets.