Figure 10-5
-Refer to Figure 10-5. The socially optimal quantity of output is
A)40 units, since the value to the buyer of the 40th unit is equal to the cost incurred by the seller of the 40th unit.
B)40 units, since the value to society of the 40th unit is equal to the cost incurred by the seller of the 40th unit.
C)70 units, since the value to the buyer of the 70th unit is equal to the cost incurred by the seller of the 70th unit.
D)70 units, since the value to society of the 70th unit is equal to the cost incurred by the seller of the 70th unit.

Question

Figure 10-5 
-Refer to Figure 10-5. The socially optimal quantity of output is
A)40 units, since the value to the buyer of the 40th unit is equal to the cost incurred by the seller of the 40th unit. 
B)40 units, since the value to society of the 40th unit is equal to the cost incurred by the seller of the 40th unit. 
C)70 units, since the value to the buyer of the 70th unit is equal to the cost incurred by the seller of the 70th unit. 
D)70 units, since the value to society of the 70th unit is equal to the cost incurred by the seller of the 70th unit.

Quizplus · Accepted Answer

The socially optimal quantity of output is where the value to society of the last unit produced equals the cost incurred by the seller, which is described in option D.

Figure 10-5 -Refer to Figure 10-5. the Socially Optimal Quantity of Output