Explain the difference between marginal social benefit and marginal external benefit
What will be an ideal response?
Marginal social benefit equals the marginal benefit enjoyed by society (by consumers of the good plus others). It equals marginal benefit plus marginal external benefit. Marginal external benefit is the benefit from an additional unit of a good that is enjoyed by someone other than the consumer.
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Economists define the short run as a period of time so short that
A) the amount of output cannot be changed except under diminishing marginal returns. B) the amount of output cannot be changed at all. C) only one factor of production can be varied. D) at least one factor of production cannot be varied.
Suppose the GDP implicit price deflator was 112.7 in 2013 and 116.0 in 2014. Therefore, the inflation rate in 2014 would be
A) 2.8%. B) 2.9%. C) 3.3%. D) 16%.
Suppose that a firm produces both steel and electricity. It is cheaper for this firm to produce both goods than it would be if they were produced by two separate firms. Further, as this firm increases its production levels of both products, the average cost of producing steel rises, while the average cost of producing electricity remains constant. This firm experiences:
A. economies of scope, diseconomies of scale in the production of steel and constant returns to scale in the production of electricity. B. economies of scope, economies of scale in the production of steel and constant returns to scale in the production of electricity. C. diseconomies of scope, economies of scale in the production of steel and constant returns to scale in the production of electricity. D. diseconomies of scope, diseconomies of scale in the production of steel and increasing returns to scale in the production of electricity.
Suppose the price elasticity coefficients of demand are 1.43, 0.67, 1.11, and 0.29 for products W, X, Y, and Z respectively. A 1 percent decrease in price will increase total revenue in the case(s) of:
A. W and Y. B. Y and Z. C. X and Z. D. Z and W.