Explain why the socially optimal output is not always the same as the market output.
What will be an ideal response?
It is only when there are no externalities that the socially optimal output is the same as the market output. If a negative externality exists, the socially optimal output will be less than the market output (which fails to take into account the social costs imposed by the externality). If a positive externality exists, the socially optimal output will be greater than the market output (which fails to take into account the social benefits created by the externality).
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Refer to Figure 13.1. Assume the voting method used to select a location for the recreation center is the Borda-count method
The residents of Desert Sands, realizing that they have no chance of winning this election, decide to remove their town from contention, so now with only 3 towns in the running, if a town gets ranked #1, it gets 2 points per vote, a town ranked #2 gets 1 point per vote, and a town ranked #3 gets no points per vote. With this method, the town that wins in this election is A) There is no clear winner in this election. B) Glacier Cove. C) Mountain View. D) Oceanside.
The marginal product of labor equals the change in ________ from a one-unit increase in the quantity of labor
A) total product B) average product C) total cost D) the slope of the average product curve E) the wage rate