Figure 7-3
Bettye Babylon does not charge admission to her arboreal estate, the Hanging Gardens. Due to space limitations, Bettye only allows 200 visitors per day at her estate. The figure represents the supply and demand for admission to the Hanging Gardens.
-Refer to Figure 7-3.At a ticket price of $0,the marginal benefit from the 200th ticket is
A) equal to the price.
B) below the price.
C) above the price.
D) negative.

Question

Figure 7-3
  Bettye Babylon does not charge admission to her arboreal estate, the Hanging Gardens. Due to space limitations, Bettye only allows 200 visitors per day at her estate. The figure represents the supply and demand for admission to the Hanging Gardens.
-Refer to Figure 7-3.At a ticket price of $0,the marginal benefit from the 200th ticket is
A) equal to the price. 
B) below the price. 
C) above the price. 
D) negative.

Quizplus · Accepted Answer

At a ticket price of $0, the quantity demanded exceeds the quantity supplied, creating a shortage. The marginal benefit (MB) is represented by the demand curve, and at the 200th ticket, the MB is still above the price of zero, indicating that the benefit of one more ticket is worth more than the cost of the ticket. Therefore, the best choice is to increase the ticket price to capture that additional marginal benefit.

Figure 7-3 Bettye Babylon Does Not Charge Admission to Her