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prpnum1 prpnum1
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Short description: A graph plots quantity against price. Long description: The graph plots five lines. Two decreasing lines represent D equals MB subscript 0 and MB subscript 1. Three increasing lines represent MC subscript 1, S equals MC subscript 0, and MC subscript 2. MC subscript 1 intersects MB subscript 0 and MB subscript 1 at B and F. S intersects MB subscript 0 and MB subscript 1 at A and E. MC subscript 2 intersects MB subscript 0 and MB subscript 1 at C and D.

FIGURE 16-1

Refer to Figure 16-1. Suppose a perfectly competitive market with no government intervention achieves equilibrium at point A. If the social marginal costs and social marginal benefits are represented by MC2 and MB0, respectively, then the competitive equilibrium quantity is



▸ too low for allocative efficiency.

▸ too high for allocative efficiency.

▸ consistent with allocative efficiency.

▸ not enough information to determine allocative efficiency.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
Author:
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darlenadarlena
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