A manager of a clothing firm is deciding whether to add another factory in addition to one already in production. The manager would compare
a. The total benefits gained from the two factories to the total costs of running the two factories.
b. The incremental benefit expected from the second factory to the total costs of running the two factories.
c. The incremental benefit expected from the second factory to the cost of the second factory
d. The total benefits gained from the two factories to the incremental costs of running the two factories.
c
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If a production process generates pollution, then a competitive market will
A) produce more of the good than is socially optimal. B) produce less of the good than is socially optimal. C) produce the socially optimal quantity of that good. D) produce zero output.
Refer to the above figure. A movement from point A to point B for a good is most likely a result of
A) an increase in the price of that good. B) a decrease in the price of that good. C) an expectation of an increase in the relative price of that good. D) an expectation of a decrease in the relative price of that good.