Suppose the Government Provides Peanut Butter to Everyone Free of Charge

Multiple Choice

Suppose the government provides peanut butter to everyone free of charge and everyone consumes it to the point at which he receives no additional satisfaction from another spoonful. Is this necessarily good?

A) Yes, because everyone is satisfied.
B) No, because there might be some cases where the resources used to produce peanut butter could have been better used to produce more of other products.
C) Yes, because the law of diminishing marginal utility indicates that in order to get the greatest amount of satisfaction from the use of resources, people should consume as much of every good as they can.
D) none of the above