After an investigation into the automobile industry we have...

After an investigation into the automobile industry, we have concluded that the marginal benefit of an additional car is $10,000. The marginal cost of producing an additional car is $12,000. It was also discovered that producers are minimizing the average costs of production. We can conclude that production is neither allocatively nor productively efficient.

'Economic efficiency is market outcome in which the marginal benefit to consumers of the last unit produced is greater than its marginal cost of production and in which the sum of consumer surplus and producer surplus is at maximum: market outcome in which the margina benefit to consumers of the last unit produced equal to its margina cost of production and in which the sum of consumer surplus and producer surplus is at maximun market outcome in which the marginal benefit to consumers of the last unit produced is equa to its margina cost of production and in which the sum of consumer surplus and producer surplus is not at maximum government outcome in which the marginal benefit to consumers of the last unit produced is equal to its margina cost of production and in which the sum of consumer surplus and producer surplus is at maximum.'

Jonathan T.

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