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

-(Exhibit: Markets and Efficiency) Referring to Panel (a):
A) at the equilibrium price of $0.80, marginal benefit exceeds marginal cost.
B) net benefit is minimized at the price of $0.80.
C) the equilibrium quantity, determined by demand and supply, is efficient.
D) total cost and total benefit are maximized.

Question

Use the following to answer question(s): Markets and Efficiency
 
-(Exhibit: Markets and Efficiency) Referring to Panel (a):
A) at the equilibrium price of $0.80, marginal benefit exceeds marginal cost. 
B) net benefit is minimized at the price of $0.80. 
C) the equilibrium quantity, determined by demand and supply, is efficient. 
D) total cost and total benefit are maximized.

Quizplus · Accepted Answer

At the intersection of the demand and supply curve, the equilibrium quantity is determined which is efficient as it maximizes total surplus, which is the sum of consumer surplus and producer surplus. Marginal benefit equals marginal cost at the equilibrium quantity, indicating allocative efficiency.

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