Figure 4-7
-Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. If 10,000 units of iced tea are sold
A) the deadweight loss is equal to economic surplus.
B) producer surplus equals consumer surplus.
C) the marginal benefit of each of the 10,000 units of iced tea equals $3.
D) marginal benefit is less than marginal cost.

Question

Figure 4-7 
-Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. If 10,000 units of iced tea are sold
A) the deadweight loss is equal to economic surplus. 
B) producer surplus equals consumer surplus. 
C) the marginal benefit of each of the 10,000 units of iced tea equals $3. 
D) marginal benefit is less than marginal cost.

Quizplus · Accepted Answer

The marginal benefit of each of the 10,000 units of iced tea equals $3 because the demand curve is downward sloping, which means that consumers are willing to pay less for each additional unit of iced tea. At the equilibrium quantity of 10,000 units, the marginal benefit of the last unit of iced tea is equal to the marginal cost of producing that unit, which is also $3.

Figure 4-7 -Refer to Figure 4-7. the Figure Above Represents the Market