last unit of a good. If P > MC, then the benefits from producing more of a good exceed the costs, and society

would gain from producing more of the good. If P < MC, then the social costs of producing the marginal

good exceed the social benefits, and society should produce less of the good. Only if P = MC, the rule

applied by a profit-maximizing perfectly competitive firm, will society’s costs and benefits be in balance.

This choice will be the option that brings the greatest overall benefit to society.

Chapter 9

1. a. A patent is a government-enforced barrier to entry.

b. This is not a barrier to entry.

c. This is not a barrier to entry.

d. This is a barrier to entry, but it is not government-enforced.

e. This is a barrier to entry, but it is not directly government enforced.

2. a. This is a government-enforced barrier to entry.

b. This is an example of a government law, but perhaps it is not much of a barrier to entry if most people
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