Figure 10-11
-Refer to Figure 10-11. Taking into account private value and external benefits, the maximum total surplus that can be achieved in this market is
A)$5,880.
B)$9,480.
C)$13,230.
D)$15,360.

Question

Figure 10-11 
-Refer to Figure 10-11. Taking into account private value and external benefits, the maximum total surplus that can be achieved in this market is
A)$5,880. 
B)$9,480. 
C)$13,230. 
D)$15,360.

Quizplus · Accepted Answer

The efficient quantity is where the marginal social benefit (MSB) equals the marginal social cost (MSC). At a quantity of 9, the MSB curve intersects the MSC curve. At this quantity, the MSB is $18 and the MSC is $6, resulting in a total surplus of $13,230 ($18-$6 = $12 of total benefit per unit x 1,110 total units). Choosing any other quantity will result in a lower total surplus.

Figure 10-11 -Refer to Figure 10-11. Taking into Account Private Value and Private