Section A: Multiple Choices Consider the following model for the production of refined oil:

MSC = 10 + 0.5Q; MEC = 0.3Q; MSB = 30 - 0.3Q; MEB = 0.

Use these relationships to answer any or all of Question 1, 2 and 3.

1. Based on the model, the MPC function is:

A. MPC = 20 - 0.8Q

B. MPC = 30 - 0.6Q

C. MPC = 10 + 0.8Q

D. MPC = 10 + 0.2Q

2. Based on the model, the price at the efficient equilibrium is

A. PE = $18

B. PE = $22.50

C. PE = $20

D. PE = $40

3. According to these relationships, the competitive output level arises where

A. QC = 25

B. QC = 20

C. QC = 40

D. none of the above

Please provide explanation.