In the figure given below,the competitive supply curve of a commodity is given by S 1 ,the private marginal benefit curve is D 1 ,the marginal social benefit curve is D 2 ,and the MB E curve reflects the marginal external benefits.
-In Figure 20-2,the efficient output is:
A)700 units.
B)400 units.
C)300 units.
D)0 units.

Question

In the figure given below,the competitive supply curve of a commodity is given by S 1 ,the private marginal benefit curve is D 1 ,the marginal social benefit curve is D 2 ,and the MB E curve reflects the marginal external benefits. 
-In Figure 20-2,the efficient output is:
A)700 units. 
B)400 units. 
C)300 units. 
D)0 units.

Quizplus · Accepted Answer

The efficient output is typically where marginal cost equals marginal benefit or demand, which is often represented by 400 units in economic models.

In the Figure Given Below,the Competitive Supply Curve of a Commodity