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Figure: ABC Company
-(Figure: ABC Company) Refer to the figure. 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

Use the following to answer questions:
Figure: ABC Company 
-(Figure: ABC Company) Refer to the figure. 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 marginal social benefit (MSB) equals marginal social cost (MSC), which is at a quantity of 2,000 units. This is where the demand curve intersects with the marginal cost curve, indicated by the green triangle in the figure. At this quantity, society is achieving the maximum potential benefit from the product while also minimizing the negative externalities of its use.

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