Use the following to answer question(s): Markets and Efficiency

-(Exhibit: Markets and Efficiency) The price and marginal cost in Panel(a) are equal because of:
A) the marginal decision rule.
B) the law of demand.
C) the law of supply.
D) the law of increasing cost.

Question

Use the following to answer question(s): Markets and Efficiency
 
-(Exhibit: Markets and Efficiency) The price and marginal cost in Panel(a) are equal because of:
A) the marginal decision rule. 
B) the law of demand. 
C) the law of supply. 
D) the law of increasing cost.

Quizplus · Accepted Answer

The marginal decision rule states that optimal decisions are made at the point where the marginal benefit equals the marginal cost. In the context of markets and efficiency, when price (representing marginal benefit to consumers) equals marginal cost, resources are allocated efficiently, which is depicted in Panel(a).

Use the Following to Answer Question(s): Markets and Efficiency