-The above figure shows the marginal social benefit, marginal private cost and marginal social cost of producing steel. If the market is competitive and unregulated, how much steel will be produced?
A) 0 tons
B) 2 tons
C) 4 tons
D) 8 tons

Question

-The above figure shows the marginal social benefit, marginal private cost and marginal social cost of producing steel. If the market is competitive and unregulated, how much steel will be produced?
A) 0 tons 
B) 2 tons 
C) 4 tons 
D) 8 tons

Quizplus · Accepted Answer

In a competitive and unregulated market, production occurs where marginal private cost equals marginal social benefit. This typically results in overproduction compared to the socially optimal level, which is where marginal social cost equals marginal social benefit. Therefore, the quantity produced will be where the marginal private cost curve intersects the marginal social benefit curve, which is 4 tons.

-The Above Figure Shows the Marginal Social Benefit, Marginal Private