Use the figure below to answer the following questions. Figure 5.3.1
-Refer to Figure 5.3.1.If the price is $15 a unit,
A)production is efficient.
B)marginal social benefit equals marginal social cost.
C)deadweight loss is zero.
D)the sum of consumer surplus and producer surplus is maximized.
E)all of the above

Question

Use the figure below to answer the following questions.  Figure 5.3.1
-Refer to Figure 5.3.1.If the price is $15 a unit,
A)production is efficient. 
B)marginal social benefit equals marginal social cost. 
C)deadweight loss is zero. 
D)the sum of consumer surplus and producer surplus is maximized. 
E)all of the above

Quizplus · Accepted Answer

If the price is $15 a unit, it can be seen from the figure that the quantity produced (Q1) is the same as the socially optimal quantity (Q*) where marginal social benefit (MSB) equals marginal social cost (MSC). This implies that production is efficient and there is no deadweight loss. Additionally, at this price, the consumer surplus and producer surplus are maximized as indicated by the shaded areas on the graph. Therefore, all of the options A, B, C, and D are true and the best choice is E.

Use the Figure Below to Answer the Following Questions