If It Costs Motorists $1 to Reduce Carbon Monoxide Emissions

question 132

Multiple Choice

If it costs motorists $1 to reduce carbon monoxide emissions from 10 pounds to 9 pounds and $3 to reduce them from 9 pounds to 8 pounds, the marginal benefit of the 9th pound of carbon monoxide is:

• A) $1.
• B) $3.
• C) $8.
• D) $9.

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Definitions:

Short Run

A period in which at least one input, such as plant size, is fixed and cannot be changed by the firm.

Fixed Plant Capacity

The maximum output that a facility can produce in a given period under normal conditions, determined by its physical size and design.

Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit or benefits gained from additional investment will eventually decline.

Explicit Costs

Direct, out-of-pocket expenses incurred in the operation of a business or investment.