The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. What is the marginal social cost to the economy of Kaffenia of producing the 300th dozen doughnuts each day?

Which of the following is a reason why decreases in the price level result in a rise in aggregate expenditure?

A) Price level decreases cause firms and consumers to hold less money, which lowers the interest rate. Lower interest rates raise consumption and planned investment expenditures, which raises aggregate expenditure. B) As the price level falls, government spending rises, which raises aggregate expenditure. C) Price level decreases in the United States relative to other countries' lower net exports, which raises aggregate expenditure. D) Price level decreases reduce real wealth, which causes consumption spending and aggregate expenditure to rise.

If MP a /P a = MP b /P b and MRP a /P a = MRP b /P b > 1, this firm is:

A. producing its output with the least costly combination of resources but is not producing the profit-maximizing output. B. maximizing profits but failing to minimize costs. C. neither maximizing profits nor minimizing costs. D. combining resources a and b so as to minimize costs and maximize profits.