(Figure: Pancakes and Cereal I) at Point G, the Marginal

Multiple Choice

(Figure: Pancakes and Cereal I) At point G, the marginal cost of a pancake is 50 cents and the marginal cost of a bowl of cereal is also fifty cents. At this point, consumers are willing to trade 2 bowls of cereal for an additional pancake. Which of the following statements is TRUE?

A) The economy is not allocating its inputs efficiently.
B) The economy is not achieving output efficiency because the MRS is less than the MRT.
C) The economy is achieving output efficiency because the MRT equals 1.
D) The economy is not achieving output efficiency because the MRS is greater than the MRT.