Refer to the Figure Below

question 97

Multiple Choice

Refer to the figure below. In this case, the private market ________ resources efficiently because ________.  

• A)does not allocate; demand and supply do not cross at the market equilibrium
• B)does not allocate; some of the costs of paper production do not fall on producers
• C)allocates; firms are motivated to maximize profit
• D)allocates; consumers are willing to pay the external cost of production

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Definitions:

Equilibrium Price

The price point at which the supply of goods matches demand, leading to a stable market condition.

Income

The financial gain received from labor, capital, or the management of assets, usually measured over a certain period of time.

Tortilla Chips

A type of snack food made from corn tortillas cut into wedges and then fried or baked.

Equilibrium Price

The price at which the quantity of goods or services supplied is equal to the quantity demanded, leading to market balance.