Question

Question 3

The following are correct statements about optimal economic decisions,   EXCEPT:

a. Optimality is attained when the marginal cost of an action is lower than its marginal benefit.

b. Optimality is attained when the marginal cost of an action is equal to its marginal benefit.

c. Optimality implies efficiency

d. Efficiency does not imply optimality

Question 12

0 / 4 points

The following are correct descriptions about the Supply Curve for certain good X, EXCEPT:

	a. It is the minimum price producers are willing to accept for any unit produced of good X.
	b. It reflects the segment of production with decreasing marginal cost.
	c. At any point on the supply curve the producer optimizes.
	d. Reflects the producer's decision to produce up to the point where market price equals marginal cost of production.

Question 21

0 / 4 points

The following are likely effects comming from a subsidy imposed on certain product x, EXCEPT:

	a. The final price paid by the consumers (after the sibsidy) will be lower.
	b. The final price received by the producer (after the subsidy) will be higher.
	c. The subsidy will increase the quantity produced of good x, and therefore increase efficiency in the economy.
	d. The subsidy will increase both consumer's and producer's well being in this market.

Answer 1

3> c. Optimality implies efficiency

Reason

When externality is present, optimal result is not an efficient outcome.

12> b. It reflects the segment of production with decreasing marginal cost.

It is an upward sloping curve, thus the marginal cost is rising.

21> b. The final price received by the producer (after the subsidy) will be higher.

After the subsidy, the final price will be lower as the price difference between what the seller gets and what the buyer is giving becomes negative.