Figure 4-7
-Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. At an output of 10,000 units
A) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is inefficiently low.
B) producers should lower the price to $1 in order to sell the quantity demanded of 10,000.
C) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low.
D) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently high.

Question

Figure 4-7 
-Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. At an output of 10,000 units
A) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is inefficiently low. 
B) producers should lower the price to $1 in order to sell the quantity demanded of 10,000. 
C) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low. 
D) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently high.

Quizplus · Accepted Answer

At an output of 10,000 units, if the marginal benefit is greater than the marginal cost, it indicates that consumers value the product more than the cost to produce it, suggesting that the output is inefficiently low.

Figure 4-7 -Refer to Figure 4-7. the Figure Above Represents the Market