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AP® Microeconomics

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Marginal Analysis: Graph for Premium Coffee

APMICR-HSKKTH

The graph below represents the marginal benefits (MB) and marginal costs (MC) of premium coffee.

Jane Schaefer. Created for Albert.io. Copyright 2016. All rights reserved.

Based on the graph above, which of the following is TRUE?

A

At a quantity of $3$, marginal benefit exceeds marginal cost by the line segment $AB$.

B

At a quantity of $7$, marginal cost exceeds marginal benefit by line segment $AB$.

C

A quantity of $3$ represents underallocation of resources to production of premium coffee.

D

The efficient quantity of premium coffee is $7$.

E

A quantity of $5$ represents an overallocation of resources to production of premium coffee.