Figure 10-2. The graph depicts the market for plastic.
-Refer to Figure 10-2. Suppose that the production of plastic creates a social cost which is depicted in the graph above. Without any government regulation, how much plastic will be produced?
A)200
B)500
C)650
D)900

Question

Figure 10-2. The graph depicts the market for plastic. 
-Refer to Figure 10-2. Suppose that the production of plastic creates a social cost which is depicted in the graph above. Without any government regulation, how much plastic will be produced?
A)200 
B)500 
C)650 
D)900

Quizplus · Accepted Answer

Without any government regulation, the production of plastic will be at the point where the marginal social cost (MSC) equals the marginal private cost (MPC). In Figure 10-2, this point is at a quantity of 650 units of plastic.