Refer to the above supply and demand graph for a public good. Point c on the graph shows where the:
A) Total benefit equals the total cost of the public good
B) Marginal benefit equals the marginal cost of the public good
C) Average benefit equals the average cost of the public good
D) Total benefit of the public good is at the maximum

Question

Refer to the above supply and demand graph for a public good. Point c on the graph shows where the:
A) Total benefit equals the total cost of the public good 
B) Marginal benefit equals the marginal cost of the public good 
C) Average benefit equals the average cost of the public good 
D) Total benefit of the public good is at the maximum

Quizplus · Accepted Answer

Point c on the graph shows where the marginal benefit equals the marginal cost of the public good. This means that the last unit of the public good produces as much benefit to society as it costs to produce it. It is the point where the market is in equilibrium, and the optimal allocation of resources is achieved.

Refer to the Above Supply and Demand Graph for a Public