Use the figure below to answer the following questions. Figure 15.3.1
-Refer to Figure 15.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If a subsidy is granted that generates an efficient quantity,then the quantity produced is

Question

Use the figure below to answer the following questions.

Figure 15.3.1
-Refer to Figure 15.3.1.The figure shows the marginal private benefit curve,the marginal social benefit curve,and the market supply curve.If a subsidy is granted that generates an efficient quantity,then the quantity produced is

Quizplus · Accepted Answer

The efficient quantity is where the marginal social benefit equals the marginal social cost, which is at point U1B0 (or QS1U1B13S1U1B0). With the subsidy, the marginal private benefit curve shifts upward and the new marginal social benefit curve becomes MSC + subsidy. This intersects the market supply curve at point S1U1B12, which is the efficient quantity produced with the subsidy. Therefore, the answer is D.

Use the Figure Below to Answer the Following Questions