Refer to Figure 4-4. At the equilibrium price of $15 consumers are willing to buy 80 pounds of tiger shrimp. Is this an economically efficient quantity?
A) No, the marginal benefit of the 80th unit exceeds the marginal cost of the 80th unit.
B) No, the marginal cost of the 80th unit exceeds the marginal benefit of the 80th unit.
C) Yes, because marginal cost is zero at the 80th unit.
D) Yes, because $15 is the price where the marginal benefit is equal to the marginal cost.
Answer: D) Yes, because $15 is the price where the marginal benefit is equal to the marginal cost.
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How does a person's perception of whether a good is a necessity or a luxury affect his or her purchases of it?
(A) People will not purchase necessities if the price increases. (B) A good that is perceived as a necessity will be purchased even if the price rises. (C) People who have a lot of money will buy goods even if they think they are a luxury. (D) A good that is perceived as expensive will no longer be considered a necessity.
The price elasticity of demand is the
a. percentage change in price divided by the percentage change in quantity demanded b. average change in price divided by the average change in quantity demanded c. percentage change in quantity demanded divided by the percentage change in price d. average change in price divided by the average change in quantity demanded e. percentage change in quantity demanded divided by the average change in price