Refer to the accompanying figure to answer the following questions.

-At which price and quantity combination would the government regulate this firm to get as close as possible to the most efficient point for society?
A) A and E
B) B and F
C) C and G
D) D and H
E) D and E

Question

Refer to the accompanying figure to answer the following questions.
 
-At which price and quantity combination would the government regulate this firm to get as close as possible to the most efficient point for society?
A) A and E 
B) B and F 
C) C and G 
D) D and H 
E) D and E

Quizplus · Accepted Answer

The most efficient point for society is where the marginal cost curve intersects the demand curve, which in this case is at point G. To get as close as possible to this point, the government would regulate the firm to produce Q2 units at a price of P2. This is represented by the intersection of the marginal cost curve at point C with the demand curve at point G. Therefore, the correct answer is C and G.

Refer to the Accompanying Figure to Answer the Following Questions