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

-(Exhibit: Markets and Efficiency) Using Panel (a), which of the following statements is (are) true?
A) A consumer purchasing apples sends a message to producers that tells them marginal benefit equals or exceeds marginal cost.
B) A consumer's decision to buy apples ratifies the decisions of producers to forgo the production of other goods to produce apples.
C) At the equilibrium price, the marginal benefit of apples to consumers is reflected by the price they are willing to pay and is equal to the marginal cost of apples.
D) All of the above statements are true.

Question

Use the following to answer question(s): Markets and Efficiency
 
-(Exhibit: Markets and Efficiency) Using Panel (a), which of the following statements is (are) true?
A) A consumer purchasing apples sends a message to producers that tells them marginal benefit equals or exceeds marginal cost. 
B) A consumer's decision to buy apples ratifies the decisions of producers to forgo the production of other goods to produce apples. 
C) At the equilibrium price, the marginal benefit of apples to consumers is reflected by the price they are willing to pay and is equal to the marginal cost of apples. 
D) All of the above statements are true.

Quizplus · Accepted Answer

All of the statements are true according to Panel (a). When a consumer purchases apples, they are willing to pay the equilibrium price, which reflects the marginal benefit they receive from consuming the apples. This also tells producers that the marginal benefit of producing apples is greater than or equal to the marginal cost, leading to the decision to continue producing apples. Thus, the free market equilibrium leads to both producer and consumer surplus while also ensuring efficiency.

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