This graph illustrates the marginal costs and marginal benefits of acquiring information before making a major purchase.
Suppose this graph describes a town in which the only way to gather any information about the good is through Consumer Reports.If the subscription price of Consumer Reports increases

Question

This graph illustrates the marginal costs and marginal benefits of acquiring information before making a major purchase. 
Suppose this graph describes a town in which the only way to gather any information about the good is through Consumer Reports.If the subscription price of Consumer Reports increases

Quizplus · Accepted Answer

If the subscription price of Consumer Reports increases, the marginal cost of acquiring information will increase, resulting in a shift of the marginal cost curve from MC₂ to MC. The marginal benefit curve will remain the same as consumers still value the same amount of information before making a major purchase. Therefore, the best choice is B.

This Graph Illustrates the Marginal Costs and Marginal Benefits of Acquiring