The figure below illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered. It also illustrates the marginal benefit. If the city of Seattle produces 20 concerts per year, then which of the following is true?

1. The marginal benefit will equal the marginal private cost.

2. There will be no deadweight loss.

3. The marginal benefit will be less than the marginal social cost.

4. The marginal benefit will equal the marginal external cost.
  

Transcribed Image Text:

Cost and benefit (thousands of dollars per concert) MSC 100 80 60 MC 40 MB 20 10 Quantity (concerts per year) 5 15 20 25 Cost and benefit (thousands of dollars per concert) MSC 100 80 60 MC 40 MB 20 10 Quantity (concerts per year) 5 15 20 25

Answer rating: 100% (QA)

Option 3 The marginal benefit will ... View the full answer