The figure above shows Kaley's marginal benefit from swimming with manatees and Scott's marginal cost of providing manatee swimming tours. For Kaley and Scott, allocative efficiency is achieved at what point?

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To determine allocative efficiency in this diagram, we need to compare the marginal benefit (MB) Kaley receives from swimming with manatees to Scott's marginal cost (MC) of providing the tours.

Option C represents the point where the two curves intersect. At the intersection, MB equals MC, which is the condition for allocative efficiency in this context: the quantity produced (manatee swims per week) is where the benefit to the consumer equals the cost to the producer, and resources are not over- or under-allocated.

Analyzing the options conceptually:
- If you were to choose a quantity left of the intersection, MB would exceed MC. This means additional tours would add more to Kaley’s benefit than they cost Scott, so increasing production would improve efficiency.
- If you were to choose a quantity right of the intersection, MC would exceed MB. Each additional tour would cost more than the benefit it provides, so reducing production would improve efficiency.
- The intersection point, where MB = MC, is precisely where the net social benefit is maximized and resources are allocated efficiently.

In this graph, the labeled intersection is point C, where the downward-sloping MB line meets the upward-sloping MC line. Therefore, allocative efficiency is achieved at point C.

ECON 215-002 HOMEWORK 6

The figure above shows Kaley's marginal benefit from swimming with manatees and Scott's marginal cost of providing manatee swimming tours. For Kaley and Scott, allocative efficiency is achieved at what point?

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ECON 215-002 HOMEWORK 6

The figure above shows Kaley's marginal benefit from swimming with manatees and Scott's marginal cost of providing manatee swimming tours. For Kaley and Scott, allocative efficiency is achieved at what point?

View Explanation

Log in for full answers

Similar Questions

The condition for allocative efficiency is violated when

The following questions refer to the monopoly graph below, where MC = marginal cost, ATC = average total cost, D = demand, and MR = marginal revenue. Which Q and P represents allocative efficiency?

Imperfectly competitive markets do not achieve allocative efficiency because profit maximization for each firm occurs when which of the following is true?

Production occurs up to that level of output at which price Blank ______ marginal cost, resulting in allocative efficiency under pure competition.

The allocatively efficient level of output is produced in any market structure when

The condition for allocative efficiency is

A situation in which an economy is using its resources to produce the best combination of goods and services to satisfy consumer desires is called

A monopolistically competitive industry does not display _______________ because ______________________.

More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

A monopolistically competitive industry does not display _ because ________.