If the demand curve fails to capture all of the benefits of consumption,then the
A) equilibrium price is efficient but the quantity will be too large.
B) equilibrium price and quantity are still efficient.
C) government needs to impose regulations that require more consumption.
D) equilibrium price is inefficiently high.
E) equilibrium price is inefficiently low.

Question

Quizplus · Accepted Answer

If the demand curve does not capture all the benefits of consumption, it means that the perceived value is lower than the actual value, leading to a lower willingness to pay. This results in an equilibrium price that is inefficiently low.

If the Demand Curve Fails to Capture All of the Benefits