Use the following to answer question(s): Market Failure

-(Exhibit: Market Failure) If the market produces quantity G, then:
A) marginal benefit is less than marginal cost.
B) marginal benefit is equal to marginal cost.
C) marginal benefit is greater than marginal cost.
D) price is equal to marginal cost and less than marginal benefit.

Question

Use the following to answer question(s): Market Failure
 
-(Exhibit: Market Failure) If the market produces quantity G, then:
A) marginal benefit is less than marginal cost. 
B) marginal benefit is equal to marginal cost. 
C) marginal benefit is greater than marginal cost. 
D) price is equal to marginal cost and less than marginal benefit.

Quizplus · Accepted Answer

According to the exhibit, at quantity G, the marginal cost (MC) is greater than the marginal benefit (MB). This means that producing more units beyond quantity G would result in the cost exceeding the benefits, indicating market failure. Therefore, the best choice is A, where marginal benefit is less than marginal cost.

Use the Following to Answer Question(s): Market Failure