-The Figure Above Shows the Market for a Good with an External

question 272

Multiple Choice

-The figure above shows the market for a good with an external benefit.When 6 units are produced,marginal social benefit equals ________ and marginal external benefit equals ________.

• A) $200; $150
• B) $350; $200
• C) $200; $50
• D) $350; $150
• E) $150; $250

Understand the impact of fixed and variable costs on product line decisions.

Recognize the components and significance of capital budgeting.

Calculate and interpret the cash payback period.

Apply the annual rate of return method for investment evaluation.

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Definitions:

Elastic

Describes a situation in economics where the demand or supply for a good or service significantly changes in response to a change in price.

Substitute Goods

Products or services that can be used in place of one another, with their demand being inversely related: as the price of one rises, the demand for the other increases.

Margarine

A butter substitute made from vegetable oils or animal fats, often used in cooking or as a spread.

Inelastic

A characteristic of a good or service whose quantity demanded or supplied changes by a smaller percentage than changes in price.