-Suppose a Factory Can Be Designed to Produce Either Trucks

question 54

Essay

-Suppose a factory can be designed to produce either trucks or cars. The figure above shows the marginal cost and marginal benefit of producing trucks in terms of the forgone cars.
a) What is the marginal benefit of the 25th truck?
b) What is the marginal cost of the 25th truck?
c) Should the 25th truck be produced? Why or why not.
d) What is the marginal benefit of the 75th truck?
e) What is the marginal cost of the 75th truck?
f) Should the 75th truck be produced? Why or why not?
g) What is the allocatively efficient quantity of trucks?

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Definitions:

Regulating Homeostatic

The process of maintaining internal balance and stability in biological systems despite changes in the external environment.

Occipital Lobe

The portion of the cerebral cortex located at the back of the brain, responsible for processing visual information.

Cerebral Cortex

The surface of the cerebrum, the largest structure of the brain, which contains both sensory and motor nerve cell bodies.

Frontal

Frontal pertains to the front part of something, often referring to the frontal lobe of the brain which is associated with decision making, problem-solving, and controlling behavior.