Use the figure below to answer the following questions. Figure 15.3.1
-Refer to Figure 15.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then
A)the quantity produced is less than the efficient quantity.
B)the quantity produced is greater than the efficient quantity.
C)price is greater than marginal social benefit quantity.
D)the marginal cost curve is horizontal.
E)the quantity produced is zero.

Question

Use the figure below to answer the following questions.  Figure 15.3.1
-Refer to Figure 15.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If production is left to the private market,then
A)the quantity produced is less than the efficient quantity. 
B)the quantity produced is greater than the efficient quantity. 
C)price is greater than marginal social benefit quantity. 
D)the marginal cost curve is horizontal. 
E)the quantity produced is zero.

Quizplus · Accepted Answer

The intersection of the marginal private benefit curve and the market supply curve gives the equilibrium quantity and price in the private market. However, this quantity is less than the efficient quantity because the marginal social benefit (MSB) is greater than the marginal private benefit (MPB) for all quantities. Therefore, there is a deadweight loss due to the market failure.

Use the Figure Below to Answer the Following Questions