Use the figure below to answer the following questions. Figure 15.2.1
-Refer to Figure 15.2.1.The figure shows the marginal private cost curve,the marginal social cost curve and the market demand curve of a mining firm.If the market is unregulated,then at the equilibrium output the marginal social cost of production is
A)less than the marginal benefit to consumers.
B)greater than the marginal benefit to consumers.
C)equal to the marginal benefit to consumers.
D)equal to the marginal private cost of production.
E)less than the marginal private cost of production.

Question

Use the figure below to answer the following questions.  Figure 15.2.1
-Refer to Figure 15.2.1.The figure shows the marginal private cost curve,the marginal social cost curve and the market demand curve of a mining firm.If the market is unregulated,then at the equilibrium output the marginal social cost of production is
A)less than the marginal benefit to consumers. 
B)greater than the marginal benefit to consumers. 
C)equal to the marginal benefit to consumers. 
D)equal to the marginal private cost of production. 
E)less than the marginal private cost of production.

Quizplus · Accepted Answer

At the equilibrium output, the marginal social cost curve intersects with the demand curve, which means the quantity produced generates a marginal social cost greater than the marginal private cost. As a result, the marginal social benefit to consumers is less than the marginal private benefit, indicating market failure. This implies that the optimal quantity for society is less than the equilibrium quantity. Therefore, the equilibrium produces too much output, and the marginal social cost is greater than the marginal benefit to consumers.

Use the Figure Below to Answer the Following Questions