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Refer to Figure 28

Question 87

Multiple Choice

  Refer to Figure 28.2. If this firm is producing a product that does not generate any externalities, the allocatively efficient output would occur where A)  Price = MC<sub>3</sub>. B)  Price = MC<sub>1</sub>. C)  Price = MC<sub>2</sub>. D)  Price = MC<sub>1</sub> plus social MC. Refer to Figure 28.2. If this firm is producing a product that does not generate any externalities, the allocatively efficient output would occur where


A) Price = MC3.
B) Price = MC1.
C) Price = MC2.
D) Price = MC1 plus social MC.

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