Suppose an economy produces milk and honey, and milk is plotted along the horizontal axis of the production possibilities frontier. The MRT is 2.5 at the current point of production, and the price of honey is $5 per unit
What is the current price of milk if the market outcome is efficient? A) $12.50 per unit
B) $10 per unit
C) $2 per unit
D) $1 per unit
C
You might also like to view...
The above figure shows the marginal benefit from pollution for two firms. If each firm receives a marketable permit to produce 25 units of pollution, which one of the following is most likely to happen?
A) Firm B will sell some pollution rights to firm A. B) Firm A will sell some pollution rights to firm B. C) Firm A will produce all 50 units of pollution. D) Both firms will produce 25 units of pollution.
Joseph decides to join the Big State University's football team when he learns that his health insurance will pay for any subsequent injury. This illustrates
A) a moral hazard problem. B) monopolistic behavior. C) a symmetric information problem. D) oligopolistic behavior.