Refer to Figure 5-2. The marginal benefit of the last unit produced is represented by the price

If a marginal cost pricing rule is imposed on the firm in the figure above, the total surplus will be

A) zero. B) $800. C) $400. D) $200.

Three individuals have $1000 and identical preferences for gum, g, and cigarettes, s, as measured by the utility function U(g,s) = 10g0.9s0.1. The price of gum is $9 and the price of cigarettes is $12. What is the market surplus/shortage at a price of $12 when the supply of cigarettes is 5?

A) There will be a shortage of 3 cigarettes. B) There will be a surplus of 3 cigarettes. C) There will be a shortage of 2/3 cigarettes. D) There will be a surplus of 2/3 cigarettes.