The figure above shows the market for pizza.
-In the figure above,if pizza production is restricted to 5,000 pizzas a day,then marginal benefit ________ marginal cost,and ________ occurs.
A) exceeds; overproduction
B) exceeds; underproduction
C) is below; overproduction
D) is below; underproduction
E) exceeds; efficient production

Question

The figure above shows the market for pizza.
-In the figure above,if pizza production is restricted to 5,000 pizzas a day,then marginal benefit ________ marginal cost,and ________ occurs.
A) exceeds; overproduction 
B) exceeds; underproduction 
C) is below; overproduction 
D) is below; underproduction 
E) exceeds; efficient production

Quizplus · Accepted Answer

When pizza production is restricted to 5,000 pizzas a day, the marginal benefit of producing one more pizza is greater than the marginal cost, indicating that there is still value to be gained from producing more. This situation leads to underproduction because the economy is not producing enough pizzas to meet the optimal level of efficiency where marginal cost equals marginal benefit.

The Figure Above Shows the Market for Pizza