Use the following to answer question:
Figure: Market Failure
-(Figure: Market Failure)Use Figure: Market Failure.In the figure,if production in this competitive market is at quantity F:
A)marginal benefit is equal to marginal cost.
B)marginal benefit is less than marginal cost.
C)marginal benefit is greater than marginal cost.
D)price is equal to marginal cost and greater than marginal benefit.

Question

Use the following to answer question:
Figure: Market Failure 
-(Figure: Market Failure)Use Figure: Market Failure.In the figure,if production in this competitive market is at quantity F:
A)marginal benefit is equal to marginal cost. 
B)marginal benefit is less than marginal cost. 
C)marginal benefit is greater than marginal cost. 
D)price is equal to marginal cost and greater than marginal benefit.

Quizplus · Accepted Answer

At quantity F, the marginal benefit (MB) and marginal cost (MC) are equal. This is the point where the market reaches allocative efficiency, meaning that the resources are allocated in the most efficient way by producing the quantity where MB=MC. Therefore, choice A is the correct answer.

Use the Following to Answer Question