The diagram illustrates the marginal private benefit (MPB), the marginal private cost (MPC) and the marginal social cost (MSC) for firms in an industry. The equilibrium price is at point X. What needs to happen to obtain allocative efficiency?
- Aa decrease in consumption and an increase in price
- Ba decrease in production and no change in price
- Can increase in consumption and a decrease in production
- Dan increase in price and no change in production