The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. Which of the following would lead the quantity of doughnuts in Kaffenia to differ from the efficient quantity?
A) The existence of many producers and sellers of doughnuts.
B) The existence of just one producer and seller of doughnuts.
C) Damage to the environment from the disposal of oil used to cook the doughnuts.
D) Both answers B and C are correct.
D
You might also like to view...
Which of the following is FALSE?
A. A change in input prices shifts the isoquant map. B. At the optimal input choice, the rate at which the firm can substitute labor for capital in production is equal to the rate at which the firm can substitute labor for capital in the market. C. A change in cost shifts the isocost curve. D. Convex isoquants mean that the marginal rate of technical substitution decreases as the firm substitutes labor for capital. E. none of the above.
If a casino locates in a small suburban/rural area within 20 miles of a larger city that already has a casino, the degree of "local substitution" is likely to be
A. actually negative. B. nearly zero. C. nearly complete. D. significant.