Use the Following to Answer Questions

question 153

Multiple Choice

Use the following to answer questions:
Figure: Market Failure
-(Figure: Market Failure) Look at the figure Market Failure. Suppose the supply curve represents the marginal cost of providing streetlights in a neighborhood that is composed of two people, Ann and Joe. The demand curve represents the marginal benefit that Ann receives from the streetlights. Suppose that Joe's marginal benefit from the streetlights is a constant amount equal to AC. Providing E streetlights is _____ because the marginal social benefit is _____ the marginal cost.

• A) efficient; equal to
• B) efficient; greater than
• C) inefficient; greater than
• D) inefficient; less than

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Definitions:

Separately Reported

Financial items or activities that are shown distinctly in financial statements to provide clarity and understanding of a company's financial position.

Outstanding Checks

Checks that have been issued and recorded in the account holder's register, but have not yet been cashed or cleared by the bank.

Customers

Individuals or businesses that purchase goods or services from another business.

Promptly

Quickly or without delay, often used in the context of responding to communications or fulfilling obligations.