"To find the economy's marginal social benefit curve for a public good, we sum the individual marginal benefit curves horizontally." True or false? Explain
What will be an ideal response?
The statement is false. To find the economy's marginal social benefit curve of a public good, we sum the individual marginal benefit curves vertically because we need to obtain the sum of what everyone together is willing to pay for each unit of a public good.
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How is a monopolistically competitive firm similar to a monopoly firm?
A) Both produce where marginal revenue equals marginal cost. B) Both will observe entry into the industry if economic profit is positive. C) Both produce a unique good. D) Both produce where price equals marginal cost.
Does Mr. McConaughey's marginal utility from spending time with family and friends and from breaking a sweat obey the principle of diminishing marginal utility?
A) No, neither obeys the principle of diminishing marginal utility. B) Only breaking a sweat obeys the principle of diminishing marginal utility. C) Yes, they both obey the principle of diminishing marginal utility. D) Only spending time with friends and family obeys the principle of diminishing marginal utility.