The optimal level of output may be defined as that level of output where
a. average benefit exceeds average cost by the greatest amount.
b. total benefit equals total cost.
c. marginal benefit exceeds marginal cost by the greatest amount.
d. the marginal benefit of the last unit purchased equals its marginal cost.
e. it is impossible to define optimal in any meaningful way.
D
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Optimization in levels calculates:
A) only the costs of an alternative and not the benefits. B) the total net benefits of different alternatives. C) the change in net benefits resulting from a shift from one alternative to another. D) only the benefits of an alternative and not the costs.
A $1.5 trillion increase in investment leads equilibrium expenditure to increase from $7.0 trillion to $10.5 trillion. In this case, the expenditure multiplier is
A) 7.00. B) 4.67. C) 2.33. D) 1.50. E) 10.5.
Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large. Each individuals demand curve will shift ________, and the market demand curve for the product will shift ________
A) to the right; to the right B) to the right; to the left C) to the left; to the left D) to the left; to the right
Typically, coffee and tea are
a. complements b. substitutes c. inferior goods d. unrelated goods e. nonmarket goods