(Table: The Socially Optimal Quantity of Flash Drives) The table The Socially Optimal Quantity of Flash Drives lists several values for price (P), quantity demanded (QD), and quantity supplied (QS) from the market demand and supply curves for flash drives.Suppose that the production of flash drives generates a marginal external cost equal to $10.The socially optimal number of flash drives will be:
A)5.
B)7.
C)9.
D)11.

Question

Quizplus · Accepted Answer

The socially optimal quantity is where the marginal social cost (MSC) equals the marginal benefit (MB). Since the marginal external cost is $10, the MSC is the market supply price plus $10. Find the quantity where this adjusted supply price equals the demand price.

(Table: the Socially Optimal Quantity of Flash Drives) the Table