This Table Shows the Marginal Benefits from Widgets Obtained by the Only

question 21

Multiple Choice

This table shows the marginal benefits from widgets obtained by the only three people who value them. Suppose widgets cost $8.50 to produce. If widgets are a private good, how many will be produced by market incentives, and is that the right (efficient) number?

• A) Zero will be produced, and this is below the socially optimal amount.
• B) One will be produced, and this is the socially optimal amount.
• C) One will be produced, and this is below the socially optimal amount.
• D) Two will be produced, and this is the socially optimal amount.