This graph shows the marginal cost and marginal benefit associated with roadside litter clean up. Assume that the marginal benefit curve and marginal cost curve each have their usual slope.
Picking up the 20th bag of litter would:
A. be socially efficient, but would not be consistent with the actions of self-interested individuals.
B. be socially efficient.
C. create deadweight loss.
D. increase total economic surplus.
Answer: C
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Refer to the graph shown. Assume the market is initially in equilibrium at point j in the graph but the imposition of a per-unit tax on this product shifts the supply curve up from S0 to S1. The amount of revenue the government will collect from this tax is equal to the area of:
A. triangle ach. B. triangle egi. C. rectangle chie. D. rectangle bkjd.
The process of making choices in increments by evaluating the additional, marginal, benefit against the additional, or marginal, ost of an action is called?
A. A logical choice B. accepted decision making C. marginal decision making D. active decision making