Marginal social cost is the
A) price a consumer pays for one more unit of a good.
B) cost a producer incurs producing one more unit of a good.
C) cost of producing one more unit of a good that falls on someone other than the producer.
D) sum of the cost a producer incurs from producing one more unit of a good plus the cost of producing one more unit of a good that falls on someone other than the producer.
E) same as marginal cost only if there is an external cost when the good is produced.
D
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The short-run average total cost (ATC) curve of a firm will tend to be U-shaped because
a. larger firms always have lower per-unit costs than smaller firms. b. at low levels of output, AFC will be high, while at high levels of output, MC will be high as the result of diminishing returns. c. diminishing returns will be present when output is small, and high AFC will push per-unit cost to high levels when output is large. d. diseconomies of scale will be present at both small and large output rates.
Which of the following is not an example of a systematic mistake that people make?
a. When asked to predict how many movie stars he can list, Ed says 200 but when put to the test he can only name 130. b. Susan watched a home improvement show in which a contractor installed a faulty deck which collapsed within 2 years of installation. She is now concerned about the safety of her own deck. c. Kate's manager asks her to work additional hours for which she will be paid her usual hourly wage. Kate weighs the value of her leisure time against the additional wages before responding to her manager. d. Bill has purchased Skillman tools for years and has recently noticed a decline in quality and durability of Skillman tools. Still, when he needs a new drill, he purchases a Skillman brand drill.