Figure 7-20

-Refer to Figure 7-20.If 4 units of the good are produced and sold,then
A) the cost to sellers exceeds the value to buyers.
B) producer surplus is maximized.
C) total surplus is minimized.
D) the allocation of resources is inefficient.

Question

Figure 7-20
 
-Refer to Figure 7-20.If 4 units of the good are produced and sold,then
A) the cost to sellers exceeds the value to buyers. 
B) producer surplus is maximized. 
C) total surplus is minimized. 
D) the allocation of resources is inefficient.

Quizplus · Accepted Answer

When 4 units of the good are produced and sold, the allocation of resources is inefficient because it implies that the quantity produced is not at the equilibrium level where total surplus (the sum of consumer and producer surplus) is maximized.

Figure 7-20 -Refer to Figure 7-20.If 4 Units of the Good Are