At the current production point on a nation's production possibilities frontier, the marginal benefit of a slice of pizza is 500 tacos while the marginal cost of producing a slice of pizza is 750 tacos
For the nation to produce at the point of allocative efficiency, what should be done?
The marginal benefit of a slice of pizza is less than its marginal cost. Therefore to produce at the point of allocative efficiency, less pizza and hence more tacos should be produced.
You might also like to view...
Refer to the scenario above. You should use ________ to make your decision
A) backward induction B) forward induction C) mixed strategies D) your dominant strategy
The actual division of the burden of a tax between buyers and sellers in a market is called
A) tax parity. B) tax incidence. C) tax bearer. D) tax liability.
Assuming a homogeneous product, the Bertrand equilibrium price is
A) independent of the number of firms. B) independent of the firm's marginal costs. C) equal to the Cournot equilibrium price. D) equal to the monopoly price.
Using time-series data, the demand function for a profit-maximizing monopolist has been estimated asQd = 142,000 - 500P + 6M - 400PRwhere Qd is the amount sold, P is price, M is income, and PR is the price of a related good. The estimated values for M and PR in 2014 are $25,000 and $200, respectively. The short-run marginal cost curve for this firm has been estimated as:MC = 200 - 0.024Q + 0.000006Q2Total fixed cost is forecast to be $500,000 in 2016.What is the average variable cost function?
A. AVC = 200 - 0.048Q + 0.000036Q2 B. AVC = 200 - 0.048Q + 0.000012Q2 C. AVC = 200 - 0.012Q + 0.000018Q2 D. AVC = 200 -0.012Q + 0.000002Q2