Figure 10-13. On the graph, Q represents the quantity of plastics and P represents the price of plastics.
-Refer to Figure 10-13. If 325 units of plastics are produced and consumed, then the
A)social optimum has been reached.
B)market equilibrium has been reached.
C)government must have imposed a corrective tax to guide the market to this outcome.
D)government must have offered a corrective subsidy to guide the market to this outcome.

Question

Figure 10-13. On the graph, Q represents the quantity of plastics and P represents the price of plastics. 
-Refer to Figure 10-13. If 325 units of plastics are produced and consumed, then the
A)social optimum has been reached. 
B)market equilibrium has been reached. 
C)government must have imposed a corrective tax to guide the market to this outcome. 
D)government must have offered a corrective subsidy to guide the market to this outcome.

Quizplus · Accepted Answer

At the intersection of the supply and demand curves, which is where the price is $3.50 and the quantity is 325, market equilibrium has been reached. This means that the market is allocating resources efficiently and no external interventions, such as corrective taxes or subsidies, are necessary.