Using Figure 4

question 88

Multiple Choice

Using Figure 4.2,suppose point C represents the optimal mix of public and private goods for a society.The market mechanism is likely to result in a mix of output represented by point

• A)F because the market mechanism is inefficient.
• B)B because the market mechanism tends to overproduce public goods.
• C)C because the market mechanism is efficient.
• D)D because the market mechanism tends to underproduce public goods.

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Definitions:

Patent

A legal right granted by a government to an inventor, giving the holder exclusive rights to use, sell, and manufacture the invention for a certain period of time.

Zero Marginal Cost

A situation where producing one additional unit of a good or service does not increase the total cost of production.

Fixed Cost

Fixed costs are business expenses that remain constant regardless of the level of production or sales, such as rent or salaries.

Patent

A form of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a certain number of years.