According to the No Marginal Improvement Principle,if X* Is the Best

question 5

Multiple Choice

According to the No Marginal Improvement Principle,if X* is the best choice,then:

• A) MB must be no greater than MC at X* or else a small increase in the activity would increase net benefits.
• B) MB must be no greater than MC at X* or else a small decrease in the activity would increase net benefits.
• C) MB must be no less than MC at X* or else a small increase in the activity would increase net benefits.
• D) the difference between MB and MC must be as great as possible.

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Definitions:

Quantity Demanded

The amount of a good or service that buyers are willing and able to purchase at a specific price.

Excess Demand

Excess demand occurs when the quantity demanded of a good or service at the current price exceeds the quantity supplied, often leading to upward pressure on prices.

Unregulated Market

A market where government agencies do not control or limit the behaviors of buyers and sellers, allowing the forces of supply and demand to freely set prices.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to a stable market condition.