Suppose that for Alicia the marginal benefit (MB) of producing is $75 and that the marginal cost (MC) of producing is $5. Suppose also that her marginal benefit of stealing is $85 and the marginal cost of stealing is $5. Is Alicia currently maximizing utility in terms of producing and stealing? If not, should she produce more and steal less, or produce less and steal more to move toward utility
maximization?
A) Yes, Alicia is maximizing utility.
B) No, Alicia is not maximizing utility. Since the MB/MC ratio for producing is less than the MB/MC ratio for stealing, Alicia should produce more and steal less.
C) No, Alicia is not maximizing utility. Since the MB/MC ratio for producing is greater than the MB/MC ratio for stealing, Alicia should produce more and steal less.
D) No, Alicia is not maximizing utility. Since the MB/MC ratio for producing is less than the MB/MC ratio for stealing, Alicia should steal more and produce less.
D
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Refer to the information provided in Figure 2.5 below to answer the question(s) that follow.
Figure 2.5Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the
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