Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which
A) the sum of the benefits to firms is equal to the sum of the benefits to consumers.
B) the sum of consumer surplus and producer surplus is minimized.
C) economic surplus is minimized.
D) the sum of consumer surplus and producer surplus is at a maximum.
Question 2
In the city of Alvarez, with the exception of guide dogs for blind people, all dogs are banned from its three public parks, regardless of whether the animals are leashed. Many residents are pushing for a change in policy.
Canine lover Sara Northridge observed, There are 800 or more homes here. There are three parks within 10 minutes, and almost everyone has a dog, but we can't take our dogs there. Others fear that allowing dogs would detract from their enjoyment of the parks. Tim Cortis retorted, We're not preventing dog lovers from enjoying the park, just come without your dog. Which of the following is a way of dealing with the problem by assigning property rights to a particular group?
A) dedicate some parks, or at least one park, exclusively for the use of visitors bringing dogs to the park
B) impose a two-tier entry fee systema lower fee for non dog owners and a higher fee for dog owners
C) impose a fee only for dog owners to use the public parks; non dog owners do not pay a fee
D) allow dog owners to bring their dogs to the park but insist that they keep watch over their dogs
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Markets and Institutions Market Story Problem