Assume That the Supply Curve Is Horizontal Because Marginal Cost

Multiple Choice

Assume that the supply curve is horizontal because marginal cost is constant at $10.John,Robert,and Jimmy each value one compact disc at $20 but only Jimmy and John value a second compact disc (Jimmy at $5 and John at $15) .If a social planner dictates that two compact discs be produced and distributed to John,Robert,and Jimmy,then even if the compact discs are allocated based on demand,this market will lose out on $___ of value.

A) $5.
B) $10.
C) $15.
D) There will be no lost value as five compact discs is the efficient level.