If the Marginal Benefit of a Hot Dog Is Greater

question 286

Multiple Choice

If the marginal benefit of a hot dog is greater than its marginal cost,then to increase efficiency,

• A) more hot dogs should be produced.
• B) fewer hot dogs should be produced.
• C) nothing should be done if the marginal benefit is greater than the marginal cost by the maximum amount because in this case the efficient quantity of hot dogs is being produced.
• D) production should be halted.
• E) More information is needed about the price of a hot dog in order to determine if production should be increased, decreased, or not changed.

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Definitions:

Rule of Reason

A legal doctrine used in antitrust law that evaluates the restrictive practices of a business by considering the purpose of the practice and its effect on competition.

Sherman Act

A landmark federal statute in the field of United States antitrust law passed in 1890 to outlaw monopolistic business practices.

Demand Elasticity

An indicator that reflects the degree of change in demand for a good due to price adjustments.

Optimal Strategy

The best course of action to achieve the highest payoff or benefit, given a particular set of conditions.