Use the following for questions 55-59.
Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit

-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (c), if activity level is at J, then there will be a deadweight loss of _______ and a net benefit of _______ .
A) CHI; ABC
B) ABC; CHI.
C) CHI; ABC minus CHI.
D) ABC minus CHI; CHI.

Question

Use the following for questions 55-59.
Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit
 
-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (c), if activity level is at J, then there will be a deadweight loss of _______ and a net benefit of _______ .
A) CHI; ABC 
B) ABC; CHI. 
C) CHI; ABC minus CHI. 
D) ABC minus CHI; CHI.

Quizplus · Accepted Answer

According to Panel (c), if the activity level is at J, the marginal benefit will be equal to marginal cost, resulting in a deadweight loss equal to CHI. The net benefit will be the area between the demand curve and the marginal cost curve up to activity level J, which is represented by the area ABC. Therefore, the net benefit will be ABC minus CHI.

Use the Following for Questions 55-59