Where a typical U shaped AC curve is falling, theMC curveSelect one:a. must be fallingmust be risinghave risen then fallenmay be falling or risingO b.c.d. Suppose that Maria wants to dine at a fancyrestaurant, but the only available table is in thesmoking section. Maria dislikes the smell ofcigarette smoke. She notices that only one person,John, is smoking in the smoking section. Mariavalues the absence of smoke at $25. John valuesthe ability to smoke in the restaurant at $15. Whichof the following represents an efficient solution inthe absence of transaction costs?Select one:a. Only a government policy banning smokingin restaurants will solve this problem.O b. John continues to smoke because he has aright to smoke in the smoking section.C.Maria offers John between $15 and $25 notto smoke. John declines because he has aright to smoke in the smoking section.O d. Maria offers John between $15 and $25 notto smoke. John accepts, and both partiesare better off.

Answered: Where a typical U shaped AC curve is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Where a typical U shaped AC curve is falling, the
MC curve
Select one:
a. must be falling
must be rising
have risen then fallen
may be falling or rising
O b.
c.
d.

Suppose that Maria wants to dine at a fancy
restaurant, but the only available table is in the
smoking section. Maria dislikes the smell of
cigarette smoke. She notices that only one person,
John, is smoking in the smoking section. Maria
values the absence of smoke at $25. John values
the ability to smoke in the restaurant at $15. Which
of the following represents an efficient solution in
the absence of transaction costs?
Select one:
a. Only a government policy banning smoking
in restaurants will solve this problem.
O b. John continues to smoke because he has a
right to smoke in the smoking section.
C.
Maria offers John between $15 and $25 not
to smoke. John declines because he has a
right to smoke in the smoking section.
O d. Maria offers John between $15 and $25 not
to smoke. John accepts, and both parties
are better off.

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Marginal cost(MC) alludes to the increment or diminishing in the cost of creating another unit or serving another one.

Average cost(AC) or unit cost is equivalent to adding up to total cost (TC) separated by the number of units of a good delivered.

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