In the Figure Given Below,the Competitive Supply Curve of a Commodity

question 7

Multiple Choice

In the figure given below,the competitive supply curve of a commodity is given by S₁,the private marginal benefit curve is D₁,the marginal social benefit curve is D₂,and the MB_E curve reflects the marginal external benefits.
-In Figure 20-2,if the current level of output is 700 units,then the marginal social benefit is:

• A)more than the marginal social cost and the output is more than the socially optimum level.
• B)more than the marginal social cost and the output is less than the socially optimum level.
• C)less than the marginal social cost and the output is more than the socially optimum level.
• D)equal to the marginal social cost and the output is equal to the socially optimum level.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overheads that are incurred to convert raw materials into finished goods.

Factory Overhead

Costs incurred during the manufacturing process that are not directly applicable to individual products, such as maintenance and utilities.

Direct Labor

The workforce engaged directly in the manufacturing process, whose wages are considered part of the production cost.

Sales Activity

The actions and processes involved in the selling of goods or services, including promotion, negotiation, and distribution.