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Multiple choice
Question at position 1 Which ones of the following statements are correct? There is more than one correct statement.Individuals will take action if the action's marginal benefit is greater than its marginal cost.For an intervention to be Pareto Optimal, it must improve the social welfare and nobody can be worse off because of it.We cannot measure the amount of "health" one has. Instead, we look at several health outcomes to get a best "guess" at someone's health.In a free market and assuming no change in the demand, if the supply of a health product increases, so does the price (it increases).In a free market and assuming no change in the supply, if the demand for a health product increases, so does the price (it increases).
Options
A.Individuals will take action if the action's marginal benefit is greater than its marginal cost.
B.For an intervention to be Pareto Optimal, it must improve the social welfare and nobody can be worse off because of it.
C.We cannot measure the amount of "health" one has. Instead, we look at several health outcomes to get a best "guess" at someone's health.
D.In a free market and assuming no change in the demand, if the supply of a health product increases, so does the price (it increases).
E.In a free market and assuming no change in the supply, if the demand for a health product increases, so does the price (it increases).
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Step-by-Step Analysis
Starting with a broad view, these statements touch on marginal analysis, Pareto efficiency concepts, health measurement, and basic supply-demand dynamics in markets. Each option will be evaluated on its own merits and common misconceptions will be addressed.
Option 1: 'Individuals will take action if the action's marginal benefit is greater than its marginal cost.' This reflects a core idea from marginal analysis in economics: rational actors compare incremental benefits and costs, and proceed when the net marginal benefit is positive. It captures why people engage in specific actions, such as investing time, effort, or resources, only if the additional benefit outweighs the additional cost. The statement aligns with standard economic reasoning about optimization at the margin.
Option 2 (Pareto ......Login to view full explanationLog in for full answers
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