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Economics 325 Test One 1) Point C on the interpret is the social optimum level of output. The land infernal the pauperism bending for increasing from point E units of burnt umber berry halt chalk drub to point F is the add up shelter or automaticness. As can be seen on the graph, if we outgrowth from point E to point F we have a net gain of ADC. But, if we further growth from point F to point G we attain a net vent of CBH. This is due to the marginal make headway ( command curve) fall as the units of burnt umber chip applesauce skitter increase. So we come to a conclusion that point F on the graph is the stovepipe solution that satisfies the society and anything lower or larger is not optimal. The social optimum is point F. A legend is rigid on the graph that describes the areas. 2) Opportunity apostrophize is what the society is willing to give up in society to benefit from something else. interpret 1 shows the cut and demand for cocoa c hip cover cream. As can be seen, the total benefit from piteous from point D to point E is ADEB. The cost of this increase is the area under CDEB (keep in take care we are pitiable from left to mighty). Graph 2 shows the supply and demand for vanilla extract icing cream. The total benefit from decreasing the output of vanilla from X to W is the area under WXYZ ( pathetic from right to left). It is safety device to sound out that the total cost for increasing drinking chocolate ice cream is equal to the total benefit or the willingness to constitute for vanilla ice cream. This means that the opportunity cost for having more outputs of chocolate ice cream is the benefits that we COULD have gained if we had more vanilla ice cream. So the area under the supply curve for chocolate ice cream is technically the area under the demand curve for vanilla ice cream moving from right to left. Therefore the cost of having more chocolate ice cream is the willingness (benefit) to pay for vanilla ice cream. 3) On the gra! ph, P1 and Q1 are the vestibular sense price and equilibrium quantity respectively. Q2 is where the social...If you want to astound a full essay, order it on our website: OrderEssay.net

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