Refer to the provided supply and demand graph for a public good. Point c on the graph shows where the
A) total beneﬁt equals the total cost of the public good.
B) marginal beneﬁt equals the marginal cost of the public good.
C) average beneﬁt equals the average cost of the public good.
D) total beneﬁt of the public good is at the maximum.

Question

Refer to the provided supply and demand graph for a public good. Point c on the graph shows where the
A) total beneﬁt equals the total cost of the public good. 
B) marginal beneﬁt equals the marginal cost of the public good. 
C) average beneﬁt equals the average cost of the public good. 
D) total beneﬁt of the public good is at the maximum.

Quizplus · Accepted Answer

Point c on the graph shows where the marginal benefit (MB) equals the marginal cost (MC) of the public good. This is the efficient level of production because at this point, society is getting the maximum benefit from the public good relative to its cost. Any level of production below point c would mean that there is still some society is willing to pay for the public good but it is not being produced. Any level of production above point c would mean that the cost of producing the additional units of the public good is greater than the benefit, leading to a waste of resources.

Refer to the Provided Supply and Demand Graph for a Public