When the marginal cost of producing sweet potatoes equals the marginal benefit, the sweet potato producer has:
a. incurred economic losses.
b. reached the optimal quantity to produce.
c. minimized the total costs of production.
d. avoided incurring any opportunity costs.
Ans: b. reached the optimal quantity to produce.
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In a perfectly competitive market, the market supply curve is the sum of the
A) supply curves of all the individual firms. B) average variable cost curves of all the individual firms. C) average total cost curves of all the individual firms. D) average fixed cost curves of all the individual firms.
When producing a good creates pollution, an external cost, and the government imposes a tax equal to the marginal external cost, then
A) the amount of output moves farther away from the efficient amount. B) transaction costs will be high. C) the efficient amount of the good will be produced. D) property rights must have already been established.