The Following Questions Refer to the graph below. -What is the efficient quantity of the polluting firm's product? A)Q₁ B)Q₂ C)Q₃ D)0 E)It cannot be determined

Question

Quizplus · Accepted Answer

The efficient quantity is where the marginal social cost (MSC) intersects with the demand curve (D), which is at point A where Q₁ is the quantity produced. At this quantity, the marginal benefit to society (MB) is equal to the MSC, which maximizes social surplus. Any quantity produced beyond this point would create more costs than benefits to society.

The Following Questions Refer to the Graph Below