Explain why the competitive output maximizes welfare
What will be an ideal response?
If less output is produced, then the last unit that is consumed will be valued by consumers more than the cost of producing it. If output is increased to the competitive level, consumers will value those additional goods more than the cost of producing them, and welfare will increase. If output is greater than the competitive output level, then the cost of producing the units beyond the competitive level is greater than the value. At output levels greater than the competitive level, welfare is decreased. Thus, the competitive output level maximizes welfare, because consumers value the last unit of output at exactly the amount that it costs to produce it.
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________ will cause a movement along the modern Phillips curve
A) An increase in oil prices B) An increase in the price of imports C) Wage agreements that include compensation for inflation D) all of the above E) none of the above
Economists segment the business cycle into phases and the phase characterized by a relatively high level of real GDP, full employment, and inflation identifies
a. recovery b. demand-pull inflation c. stagflation d. expansion e. prosperity
The line of perfect income equality is
A. X.
B. Y.
C. Z.
D. not shown on this graph.
The total cost to build 8 tract houses is $1,000,000. Total cost to build 9 tract houses $1,050,000. What is the Margin cost of the 9th tract house?
What will be an ideal response?