Author Question: A good or service with a positive externality is one which ______. A. everyone wants to have ... (Read 61 times)

jhjkgdfhk · **on:** Jun 29, 2018

A good or service with a positive externality is one which ______.

A. everyone wants to have access to
B. is produced in the social interest
C. the marginal social benefit exceeds the marginal private benefit
D. the marginal external benefit exceeds the marginal private benefit

Question 2

During an economic slump such as the 2008 recession, what pricing strategies could a fast-food chain such as McDonald's use to maintain its sales? Use some of the concepts discussed in this chapter in your answer.

What will be an ideal response?

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

Answer to Question 1

C The definition of marginal social benefit shows that answer C is correct.

Answer to Question 2

Fast food firms usually face a relatively price elastic demand curve. The demand for fast food is also relatively income elastic as consumers tend to eat out less as their income falls. For firms that face an elastic demand curve, total revenues can be increased by reducing prices.