Reference: Ref 10-6 (Figure: ABC Company) The figure depicts the market for a water cleaner for home aquariums. After use it gets washed down drains and enters into streams where it improves the mineral content of the water and thus leads to better water quality and better fish growth. What is the efficient quantity in this market?
A) 1,600
B) 400
C) 2,000
D) 3,600

Question

Reference: Ref 10-6 (Figure: ABC Company) The figure depicts the market for a water cleaner for home aquariums. After use it gets washed down drains and enters into streams where it improves the mineral content of the water and thus leads to better water quality and better fish growth. What is the efficient quantity in this market?
A) 1,600 
B) 400 
C) 2,000 
D) 3,600

Quizplus · Accepted Answer

The efficient quantity is where the marginal benefit equals the marginal cost, which is at the intersection of the demand and supply curves. In this case, it is at a quantity of 2,000. At this quantity, the price is $4 and the total surplus (consumer surplus plus producer surplus) is maximized. Therefore, choice C is the best option.

Reference: Ref 10-6 (Figure: ABC Company) the Figure Depicts the Market