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Illustrate and prove that the rate of output that equates MSB with MSC is (statically) efficient. Graphically illustrate that static efficiency results in greater benefits
Illustrate and prove that the rate of output that equates MSB with MSC is (statically) efficient. Graphically illustrate that static efficiency results in greater benefits to society than production at a level greater than static efficiency would imply. (10 points) In a second graph, show and discuss what happens to the statically efficient rate of output when there is population and income growth? (10 points)
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