In a market, social surplus is maximized if consumers' willingness to pay for the good equals the ________
A) marginal private cost of producing the good
B) marginal external cost of producing the good
C) marginal social cost of producing the good
D) opportunity cost of producing the good
C
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Figure 10-16
Suppose an economy is currently operating at output Y1 associated with AD1 and SRAS1, shown in . Initially, the output of this economy is
a.
above its potential, and the rate of unemployment is greater than the natural rate.
b.
below its potential, and the rate of unemployment is greater than the natural rate.
c.
above its potential, and the rate of unemployment is less than the natural rate.
d.
below its potential, and the rate of unemployment is less than the natural rate.
If all individuals have identical utility functions and the marginal utility of income decreases as income increases, transferring income ________ will ________ total utility.
A. from the rich to the poor; increase B. from the poor to the rich; not change C. from the rich to the poor; not change D. from the rich to the poor; decrease