Hermione is Correct.

Firms should produce up to the point where Marginal Revenue (the revenue
received from the company producing one more unit) = Marginal Cost (the
cost of producing one more Unit) . This ensures the firm will maximize its
profit.

I think Hermione is right, because by comparing these marginal benefits and marginal costs,
they can evaluate whether the increase in production is worthwhile.

a. Efficiency, cable companies often have market power due to firms controlling an unfair
amount of the market causing market failure.
b. Equity
c. Efficiency, second-hand smoke causes a negative externality for non-smokers around
the smokers.
d. Efficiency, one group or individual having disproportionately large control of the
market causes market failure due to market power.
e. Equity
f. Efficiency. Driving drunk causes an externality to bystanders who may be injured or
killed.