As a General Rule,failure to Equalize the Marginal Benefits and Costs

question 55

Multiple Choice

As a general rule,failure to equalize the marginal benefits and costs of any publicly approved activity,e.g. ,crime control,results in

• A)an inefficient level of the activity;either too little or too much.
• B)too much of the activity.
• C)too little of the activity.
• D)the wrong activities.

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Definitions:

Returns To Scale

The change in output resulting from a proportional change in all input factors where all inputs are increased or decreased by the same factor.

Marginal Products

This refers to the additional output that results from using an extra unit of a particular input, assuming other inputs are constant in the production process.

Production Function

A mathematical expression that describes the relationship between input factors and the output of goods or services.

Returns To Scale

The change in output of a production process as all inputs are increased proportionally.