In the competitive market for balloon rides, marginal social cost equals marginal social benefit when 3,000 balloon rides a day are taken and the price of a ride is 130. Which of the following statements is TRUE?
A) There is a free-rider problem.
B) Too many rides are available.
C) Too few rides are available and the price of a balloon ride is too high.
D) The efficient quantity of balloon rides is 3,000 a day.
Question 2
Greg, a landscaper, is planning on opening his own landscaping company. He currently earns 40,000 per year working for his uncle but he will need to quit that job.
He plans to use 10,000 in savings to pay for the equipment he needs, though even after use he could sell the equipment for what he paid, 10,000. The current interest rate on savings is 5 percent. What is the total opportunity cost incurred by Greg in running his own business? A) 10,000
B) 40,500
C) 40,000
D) 50,000
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