If the marginal social benefit of consuming a product exceeds the marginal social cost of producing it, social welfare is
a. increased by reducing output
b. decreased by expanding output
c. unchanged by expanding or reducing output
d. increased by expanding output
e. maximized
QUESTION 2Both sugar and fructose can be used in the production of candy. If the price of sugar increases,
a. the demand for sugar increases
b. sugar becomes relatively more expensive than fructose only if the price of fructose falls
c. sugar becomes relatively more expensive than fructose, other things constant
d. the price of fructose immediately increases
e. the price of fructose immediately decreases
QUESTION 3To maximize social welfare in the presence of a negative externality, marginal __________ must equal marginal __________.
a. social cost; private cost
b. private cost; social cost
c. social cost; social benefit
d. private cost; social benefit
e. social cost; external cost
QUESTION 4If the demand for tacos increases,
a. the supply of corn increases
b. the supply of corn decreases
c. the demand for corn increases
d. the demand for corn decreases
e. the price of corn falls
QUESTION 5If firms pollute when they produce,
a. marginal social cost equals marginal private cost
b. marginal private cost exceeds marginal social cost
c. marginal social cost exceeds marginal private cost
d. marginal social cost equals marginal external cost
e. marginal social cost equals marginal private cost, which equals marginal external cost
QUESTION 6The market demand curve for a resource is the
a. horizontal sum of the demand curves for that resource in all its various uses
b. difference among the demand curves for that resource in all its various uses
c. demand for that resource in its best use
d. sum of the demand curves for that resource in its best two uses
e. vertical sum of the demand curve for that resource in all its various uses
QUESTION 7The optimal level of pollution occurs where the marginal social benefit is equal to
a. marginal private cost, which equals marginal social cost plus marginal external cost
b. marginal social cost, which equals marginal private cost plus marginal external cost
c. marginal external cost, which equals marginal private cost plus marginal social cost
d. marginal private cost, which equals marginal social cost plus marginal internal cost
e. marginal social cost, which equals marginal private cost plus marginal internal cost
QUESTION 8Because it is based on the demand for products, the demand for labor is called
a. a substitution demand
b. a complementary demand
c. an income demand
d. a derived demand
e. a marginal demand
Quick Reply
