Table 10-1
The following table shows the private value, private cost, and external cost for various quantities of output in a market.
-Refer to Table 10-1. What is the equilibrium quantity of output in the market?
A)2 units
B)3 units
C)4 units
D)5 units

Question

Table 10-1
The following table shows the private value, private cost, and external cost for various quantities of output in a market. 
-Refer to Table 10-1. What is the equilibrium quantity of output in the market?
A)2 units 
B)3 units 
C)4 units 
D)5 units

Quizplus · Accepted Answer

The equilibrium quantity is where the marginal private cost equals the marginal private value, which occurs at an output of 3 units. At this quantity, the total external cost is $9, which is less than the total private value of $30, indicating that the market can produce efficiently. No other quantity maximizes the net benefit to society.

Table 10-1 the Following Table Shows the Private Value, Private Cost, and Cost