The private marginal benefit for commodity X is given by 15 - X, where X is the number of units consumed. The private marginal cost of producing X is constant at 10. In the absence of any government intervention, how much X is produced? What is the gain to society involved in moving from the inefficient to the efficient level of production?
What will be an ideal response?
Without intervention, optimal will be where PMB = 0. X = 15. The efficient level is X = 5. The
area beneath the PMB is gained. Gain = 25.
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Many states in the U.S. acquire significant amounts of funds from the following, except
A. personal income taxes. B. grants from the Federal government. C. property taxes. D. state-run lotteries.
In perfect competition, marginal revenue
A) increases as more is sold. B) decreases as more is sold. C) is equal to the market price. D) is zero. E) is always greater than marginal cost.
Federal funds rate targets and reserve targets are incompatible when the Federal Reserve wants to
A) expand reserves and lower interest rates. B) expand reserves and raise interest rates. C) contract reserves and the money supply. D) contract reserves and raise interest rates.
A monopolist will
a. never produce at an output level where marginal revenue is positive b. never produce at an output level where marginal revenue is constant c. never produce at an output level where marginal revenue is negative d. never produce at an output level where marginal cost is positive e. ignore marginal revenue as long as average revenue is positive