Author Question: The figure above shows the market for milk. If the government pays the milk producers a subsidy and ... (Read 133 times)

mcmcdaniel · **on:** Jun 29, 2018

The figure above shows the market for milk. If the government pays the milk producers a subsidy and production increases to 300 gallons per day

A) the market is efficient because the marginal social benefit from the last gallon of milk exceeds its marginal social cost.
B) the market is efficient because the total social benefit from milk exceed the total social cost.
C) there is a deadweight loss because the marginal social benefit from the last gallon of milk exceeds its marginal social cost.
D) there is a deadweight loss because the marginal social cost of the last gallon of milk exceeds its marginal social benefit.

Question 2

The maximum economic profit that can be made by a duopoly that colludes is equal to the ________.

A) economic profit made by duopolists who cheat
B) normal profit made by an oligopoly
C) economic profit made by a monopoly
D) normal profit made by firms in perfect competition