Exhibit 17-7 Exhibit 17-7 represents the consumer market for driving their automobiles.If drivers base their driving decisions on the marginal social cost of driving their cars, how many miles will they drive?

Question

Exhibit 17-7  Exhibit 17-7 represents the consumer market for driving their automobiles.If drivers base their driving decisions on the marginal social cost of driving their cars, how many miles will they drive?

Quizplus · Accepted Answer

The point where the marginal social cost intersects with the marginal private benefit is the efficient quantity of driving. In Exhibit 17-7, this occurs at 3,000 miles. Any additional driving beyond this point results in a negative externality, where the costs to society exceed the benefits to the individual driver. Therefore, C) 3,000 miles is the best choice for drivers who base their driving decisions on the marginal social cost.

Exhibit 17-7 Exhibit 17-7 Represents the Consumer Market for Driving