Use the following to answer question:
Figure: Model of a Competitive Market
-(Figure: Model of a Competitive Market)Use Figure: Model of a Competitive Market.Given the figure,if there are no external benefits or costs,the output at Q will be:
A)larger than is socially desirable.
B)smaller than is socially desirable.
C)efficient.
D)inefficient.

Question

Use the following to answer question:
Figure: Model of a Competitive Market 
-(Figure: Model of a Competitive Market)Use Figure: Model of a Competitive Market.Given the figure,if there are no external benefits or costs,the output at Q will be:
A)larger than is socially desirable. 
B)smaller than is socially desirable. 
C)efficient. 
D)inefficient.

Quizplus · Accepted Answer

The point where the supply and demand curves intersect is known as the equilibrium point of the market. At this point, the price is equal to the marginal cost of producing the last unit, and the market is efficient. Therefore, the output at Q is efficient, and there are no external benefits or costs.

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