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AP® Microeconomics

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Moderate

Fire Protection Services in Mapleton Inefficiency

APMICR-QLEOX4

The graph below shows the market for fire protection services in the village of Mapleton, which are provided by a private company on a subscription basis to households which pay an annual fee.

Currently, the market for fire protection services includes benefits to those who do not pay for them. Without government involvement in the market, the deadweight loss from the production of fire protection services would be equal to the total of which area(s)?

A

A only

B

None because no deadweight loss would occur.

C

C and D

D

A, B and E

E

A and B