The figure shows two graphs. In both of them, the horizontal axis shows the quantity of pizzas produced in thousands per day. It ranges from 0 to 20 in increment of 5. The vertical axis shows the price of a pizza in dollars. It ranges from 0 to 20 in increment of 5. Two lines are shown in the graph. A line labeled as S= MC moves diagonally upward, starting on the vertical axis at an approximate value of y=2. Another line labeled as D=MB moves diagonally downward, starting on the vertical axis at y=20. The two lines intersect at a point whose coordinates are (10,10). This point is the “Market equilibrium” point.

The graph on the left shows the effect of underproduction of pizzas. A dotted line is drawn parallel to the vertical axis at x=5, which ...

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