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Figure: Market Failure (Figure: Market Failure) Look at the Figure

Question 161

Multiple Choice

Figure: Market Failure Figure: Market Failure (Figure: Market Failure) Look at the figure Market Failure.Suppose the supply curve represents the marginal cost of providing street lights in a neighborhood that is composed of two people, Ann and Joe.The demand curve represents the marginal benefit that Ann receives from the street lights.Suppose that Joe's marginal benefit from the street lights is a constant amount equal to AC.Providing F street lights is _______ because _. A) efficient; the marginal social benefit is equal to the marginal cost B) efficient; the marginal social benefit is greater than the marginal cost C) inefficient; the marginal social benefit is greater than the marginal cost D) inefficient; the marginal social benefit is less than the marginal cost Figure: Market Failure (Figure: Market Failure) Look at the figure Market Failure.Suppose the supply curve represents the marginal cost of providing street lights in a neighborhood that is composed of two people, Ann and Joe.The demand curve represents the marginal benefit that Ann receives from the street lights.Suppose that Joe's marginal benefit from the street lights is a constant amount equal to AC.Providing F street lights is _______ because _. A) efficient; the marginal social benefit is equal to the marginal cost B) efficient; the marginal social benefit is greater than the marginal cost C) inefficient; the marginal social benefit is greater than the marginal cost D) inefficient; the marginal social benefit is less than the marginal cost (Figure: Market Failure) Look at the figure Market Failure.Suppose the supply curve represents the marginal cost of providing street lights in a neighborhood that is composed of two people, Ann and Joe.The demand curve represents the marginal benefit that Ann receives from the street lights.Suppose that Joe's marginal benefit from the street lights is a constant amount equal to AC.Providing F street lights is _______ because _.


A) efficient; the marginal social benefit is equal to the marginal cost
B) efficient; the marginal social benefit is greater than the marginal cost
C) inefficient; the marginal social benefit is greater than the marginal cost
D) inefficient; the marginal social benefit is less than the marginal cost

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