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, what price will the firm charge per unit of plastic?
A)$4.00
B)$6.00
C)$7.00
D)$10.00

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, what price will the firm charge per unit of plastic?
A)$4.00 
B)$6.00 
C)$7.00 
D)$10.00

Quizplus · Accepted Answer

The firm will charge $7.00 per unit of plastic without any government regulation because that is the price at which the marginal cost of production (MC) equals the marginal social cost (MSC).