--%>

Society decide its optimal point on the production

How does society decide its optimal point on the production possibilities curve?

E

Expert

Verified

1. Recall that society receives marginal benefits from each additional product consumed, and as long as this marginal benefit is more than the additional cost of the product, it is advantageous to have the additional product.

2. Conversely, if the additional (marginal) cost of obtaining an additional product is more than the additional benefit received, then it is not “worth” it to society to produce the extra unit.

3. Marginal benefits decline as society consumes more and more pizzas.

a. Beyond that, the added benefits would be less than the added cost.

b. At less than 200,000, the added benefits will exceed the added costs, so it makes sense to produce more.

4. Generalization:  The optimal production of any item is where its marginal benefit is equal to its marginal cost.  As an eg: this ought to come about at 7,000 robots for robots.

   Related Questions in Business Economics

  • Q : Enterprise is dictated primarily by

    “The legal form an enterprise assumes is dictated primarily by the financial requirements of its particular line of production.”  Do you agree?

  • Q : High-convexity portfolios outperform

    a) Whether the bond market moves up or down, high-convexity portfolios will for all time outperform low-convexity portfolios of equal duration and yield." Elucidate the argument supporting this statement and the connection to the classical immunization strategy. What

  • Q : Example of simultaneous changes in both

    Elucidate an example of simultaneous changes in both supply and demand?

  • Q : Need of the Economic Efficiency

    Economic efficiency for society needs which the: (i) opportunity costs of all goods be at their lowest possible values. (ii) maximum probable benefits are acquired for given costs. (iii) greatest possible net benefits are squeezed through available re

  • Q : Market system automatically adjustment

    Concept of Adam Smith that the market system automatically adjusts as when guided through an “invisible hand” most intimately resembles: (1) flows of electricity across the microcircuits within computer chips. (2) homeosta

  • Q : Garfield’s utility function Problem 2

    Problem 2 Consider Garfield's utility function given as U(x1, x2) = x1x2, wher

  • Q : Prices are the automatic regulator

    “Prices are the automatic regulator that tends to keep production and consumption in line with each other.”  Explain.

  • Q : Budget line and indifference curves

    Question: Monica has been considering buying a mountain bike. Last month Monica had an income of $30,000. The bike's price was $1000, the composite good price was $1, and she decided not to buy the bike.  This month Monica was surprised t

  • Q : Other things equal assumption helps

    Explain the statement: “The other things equal assumption helps isolate key economic relationships.”?

  • Q : Contestable Markets The least probable

    The least probable of the given industries to be a contestable market is: (1) video rentals. (2) pizza delivery. (3) cable television. (4) trucking. Can someone explain/help me with best solution about problem of <