Figure 7-20
-Refer to Figure 7-20.For quantities less than M,the value to the marginal buyer is
A)greater than the cost to the marginal seller,so increasing the quantity increases total surplus.
B)less than the cost to the marginal seller,so increasing the quantity increases total surplus.
C)greater than the cost to the marginal seller,so decreasing the quantity increases total surplus.
D)less than the cost to the marginal seller,so decreasing the quantity increases total surplus.

Question

Figure 7-20 
-Refer to Figure 7-20.For quantities less than M,the value to the marginal buyer is
A)greater than the cost to the marginal seller,so increasing the quantity increases total surplus. 
B)less than the cost to the marginal seller,so increasing the quantity increases total surplus. 
C)greater than the cost to the marginal seller,so decreasing the quantity increases total surplus. 
D)less than the cost to the marginal seller,so decreasing the quantity increases total surplus.

Quizplus · Accepted Answer

When the quantity is less than M, the marginal cost is lower than the marginal value of the good, so the marginal buyer is willing to pay more than what the marginal seller incurs. Therefore, increasing the quantity will allow more buyers to benefit from the lower price, which increases total surplus.

Figure 7-20 -Refer to Figure 7-20.For Quantities Less Than M,the Value to M,the