Figure 10-11
-Refer to Figure 10-11. A benevolent social planner would prefer
A)a $24 price to any other price.
B)420 units to any other quantity of output.
C)a subsidy of $24 per unit to a subsidy of $27 per unit.
D)All of the above are correct.

Question

Figure 10-11 
-Refer to Figure 10-11. A benevolent social planner would prefer
A)a $24 price to any other price. 
B)420 units to any other quantity of output. 
C)a subsidy of $24 per unit to a subsidy of $27 per unit. 
D)All of the above are correct.

Quizplus · Accepted Answer

A benevolent social planner would want to maximize total surplus, which occurs at the intersection of the supply and demand curves. At the price of $24, the quantity demanded and quantity supplied intersect at 420 units. This results in the maximum total surplus, which is the welfare of both producers and consumers combined. Therefore, the social planner would prefer 420 units to any other quantity of output. The subsidy level does not affect the quantity traded or the total surplus, so it is not a relevant consideration for the social planner.

Figure 10-11 -Refer to Figure 10-11. a Benevolent Social Planner Would Prefer