If Social Marginal Benefit (SMB) > Price (P) = Buyer's Private Marginal Benefit (MB) = Seller's Private Marginal Cost (MC) = Social Marginal Cost (SMC), it implies that
A. not enough of a good is being demanded.
B. the socially optimal amount is supplied.
C. the buyers are not maximizing utility.
D. too much of the product is supplied.
Answer: A
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The reason why public subsidization of industries in less-developed countries causes slow economic growth is that:
a. when companies face no competition, there is no incentive for them to improve their production. b. too much of the taxpayer's money is spent in these programs. c. consumers tend to develop an aversion for the purchase of subsidized goods and services. d. subsidies tend to create too much competition for products. e. subsidization creates shortage in the product market.
On a certain supply curve, one point is (quantity supplied = 200, price = $2.00) and another point is (quantity supplied = 250, price = $2.50). Using the midpoint method, the price elasticity of supply is about
a. 0.2. b. 0.5. c. 1.0. d. 2.5.