Use the table below to answer the following questions.
Table 15.2.1
-Refer to Table 15.2.1.Given in the table are the marginal private cost and the marginal social cost of the production of chemical fertilizer and the marginal social benefit from the consumption of fertilizer.If the market is unregulated,the quantity produced is
A)1 unit.
B)2 units.
C)3 units.
D)4 units.
E)5 units.

Question

Use the table below to answer the following questions.
Table 15.2.1 
-Refer to Table 15.2.1.Given in the table are the marginal private cost and the marginal social cost of the production of chemical fertilizer and the marginal social benefit from the consumption of fertilizer.If the market is unregulated,the quantity produced is
A)1 unit. 
B)2 units. 
C)3 units. 
D)4 units. 
E)5 units.

Quizplus · Accepted Answer

The market will produce the quantity where marginal private cost equals marginal private benefit (i.e., where supply equals demand), which in this case is 4 units. At a quantity of 4, the social benefit (represented by the demand curve) is greater than the social cost (represented by the marginal social cost curve), so this quantity is considered socially optimal.

Use the Table Below to Answer the Following Questions