Author Question: Consider the production of some industrial good that creates air pollution. The table below gives ... (Read 55 times)

mp14 · **on:** Jun 29, 2018

Consider the production of some industrial good that creates air pollution. The table below gives the marginal social cost (MSC), the marginal cost (MC), and the marginal social benefit (MSB) for each level of output (Q).

Q MSC MC MSB 1 3 2 11 2 6 4 10 3 9 6 9 4 12 8 8 5 15 10 7 6 18 12 6 The inefficient market quantity is ________ and the efficient market quantity is ________. A) 4; 3
B) 6; 3
C) 3; 4
D) 4; 6

Question 2

If your labor supply increases when you get a raise, which of the following is TRUE?

A) Your substitution effect is greater than your income effect.
B) Your substitution effect is less than your income effect.
C) Your substitution effect equals your income effect.
D) None of the above answers is correct.