If marginal benefit is equal to marginal cost, then the producer surplus is equa
ID: 1152112 • Letter: I
Question
If marginal benefit is equal to marginal cost, then the
producer surplus is equal to the consumer surplus.
sum of producer surplus and consumer surplus is as large as possible.
sum of producer surplus and consumer surplus equals zero.
market has squeezed out total surplus so that it equals zero.
deadweight loss is more than zero but less than its maximum.
a.producer surplus is equal to the consumer surplus.
b.sum of producer surplus and consumer surplus is as large as possible.
c.sum of producer surplus and consumer surplus equals zero.
d.market has squeezed out total surplus so that it equals zero.
e.deadweight loss is more than zero but less than its maximum.
Explanation / Answer
The answer is option (D).
D) If marginal benefit is equal to marginal cost that means the benefit got from a extra unit of a particular good is equal to its marginal cost, that means the market is in equilibrium. The surplus generated from it has been squeezed so its zero.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.