In the Following Figure, the First Panel Shows a Market

question 19

Multiple Choice

In the following figure, the first panel shows a market situation prior to regulation and the second panel shows the effects of regulation.Figure 14.2
In the figure,
D: Demand curve for automobiles
S₁: Supply curve of automobiles prior to regulation
S₂: Supply curve of automobiles after regulation
FG: Clean up cost per unit
-In the market for resources, demand and supply:

• A)do not behave in the same way as they do in product markets.
• B)behave in exactly the same way as they do in product markets.
• C)curves usually do not intersect at equilibrium.
• D)are both controlled by firms.
• E)are both controlled by households

---

Definitions:

Marginal Analysis

The comparison of marginal (“extra” or “additional”) benefits and marginal costs, usually for decision making.

Marginal Benefits

The uplift in utility or enjoyment gained through consuming or producing an added unit of a good or service.

Marginal Costs

The added cost incurred when one more unit of a good or service is produced.

Marginal Benefit

The additional pleasure or utility gained when one more unit of a good or service is consumed.