-The Figure Above Shows the Market for Tomatoes

question 34

Multiple Choice

-The figure above shows the market for tomatoes. When the government introduces a subsidy for tomatoes of $4 a kilogram, the quantity produced is _______ because _______.

• A) inefficient; marginal social benefit is less than marginal social cost
• B) inefficient; marginal social cost is less than marginal social benefit
• C) efficient; marginal social cost is less than marginal social benefit
• D) efficient; marginal social benefit equals marginal social cost

---

Definitions:

Perfect Competitor

An individual or company within a perfectly competitive market that cannot influence the market price and must accept the prevailing market price.

Long Run

In economics, a period in which all inputs and outputs can be varied, allowing for the adjustment of all factors of production.

Perfect Competitor

A theoretical market where no individual buyer or seller has the power to affect the price of goods, leading to an optimal allocation of resources.

Long Run

A period in economics sufficient for all markets to adjust, including prices, outputs, and wages, reflecting changes in economic conditions or policies.