The Diagram Below Shows the Marginal Benefit and Marginal Cost

question 112

Multiple Choice

The diagram below shows the marginal benefit and marginal cost of a public good.This economy has 3 individuals,A,B and C.The diagram shows the MB for each individual and a summation of their marginal benefits. FIGURE 16-4
-Refer to Figure 16-4.Suppose the government provides Q₄ units of the public good.If the government was able to require consumers to pay a price of P₄,then

• A)the market would clear,although not enough would be produced.
• B)the inefficient quantity would be being produced.
• C)the appropriate price would be achieved,although not enough would be consumed.
• D)consumers would not use the public good at all,and this would be socially optimal.
• E)consumers would use too little of the public good,and this would be inefficient for society.

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