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Figure: Market Failure
-(Figure: Market Failure) Look at the figure Market Failure. Suppose it represents the demand for and marginal cost per pound of shrimp in the bay. The additional cost of the shrimp due to the depletion of the common resource is equal to AC. Without government intervention, the price of shrimp will be _____ per pound.
A) 0
B) A
C) B
D) C

Question

Use the following to answer questions:
Figure: Market Failure 
-(Figure: Market Failure) Look at the figure Market Failure. Suppose it represents the demand for and marginal cost per pound of shrimp in the bay. The additional cost of the shrimp due to the depletion of the common resource is equal to AC. Without government intervention, the price of shrimp will be _____ per pound.
A) 0 
B) A 
C) B 
D) C

Quizplus · Accepted Answer

Without government intervention, the price of shrimp will be at the equilibrium where the demand curve intersects the marginal cost curve, which is at point B.

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