Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. At an output of 10,000 units
A) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low.
B) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is inefficiently low.
C) producers should lower the price to $1 in order to sell the quantity demanded of 10,000.
D) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently high.
A
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