Figure 4-7 -Refer to Figure 4-7. the Figure Above Represents the Market

Multiple Choice

Figure 4-7
-Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. At a price of $3,

A) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is inefficiently low.
B) producers should lower the price to $1 in order to sell the quantity demanded of 10,000.
C) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low.
D) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently high.