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The Diagram Below Shows the Marginal Benefit and Marginal Cost

Question 112

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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. 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 Q<sub>4</sub> units of the public good.If the government was able to require consumers to pay a price of P<sub>4</sub>,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. 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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