-In the above figure, when 2,000 bicycles are produced each month, we can see that
A) the marginal benefit from another bicycle is greater than the marginal cost of another bicycle.
B) more bicycles should be produced to reach the allocatively efficient level of output.
C) the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost.
D) Both answers A and B are correct.

Question

-In the above figure, when 2,000 bicycles are produced each month, we can see that
A) the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B) more bicycles should be produced to reach the allocatively efficient level of output. 
C) the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost. 
D) Both answers A and B are correct.

Quizplus · Accepted Answer

When the marginal benefit from another bicycle is greater than the marginal cost of another bicycle, it indicates that the allocatively efficient level of output has not been reached, and more bicycles should be produced to maximize net benefits. Thus, both A and B are correct.

-In the Above Figure, When 2,000 Bicycles Are Produced Each