Author Question: If the marginal social cost exceeds the marginal social benefit for the last pair of shoes produced, ... (Read 131 times)

gbarreiro · **on:** Jun 29, 2018

If the marginal social cost exceeds the marginal social benefit for the last pair of shoes produced, then the economy is producing more than the efficient amount.

Indicate whether the statement is true or false

Question 2

If firms in an oligopoly enter into a collusive agreement to operate as a monopoly, the industry produces the most output and if they operate as perfect competitors, the industry produces the least output.

Is the previous statement correct or incorrect? Why?

Shshxj · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

TRUE

Answer to Question 2

The statement is incorrect; it reverses the outcomes. If the firms in an oligopoly operate as a monopoly, the industry produces the least output and if they operate as perfect competitors, the industry produces the most output.