Scenario 10-1
The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 400th gallon of gasoline entails the following:
  a private cost of $2.83;
  a social cost of $3.12;
  a value to consumers of $3.23.
-Refer to Scenario 10-1. Let Q represent the number of gallons of gasoline and let P represent the price of a gallon of gasoline. Which of the following statements is correct?
A)One point on the social-cost curve is (Q = 400, P = $0.29).
B)One point on the supply curve is (Q = 400, P = $2.83).
C)One point on the demand curve is (Q = 400, P = $3.12).
D)The socially optimal quantity of gasoline is less than 400 gallons.

Question

Scenario 10-1
The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 400th gallon of gasoline entails the following:
   a private cost of $2.83;
   a social cost of $3.12;
   a value to consumers of $3.23.
-Refer to Scenario 10-1. Let Q represent the number of gallons of gasoline and let P represent the price of a gallon of gasoline. Which of the following statements is correct?
A)One point on the social-cost curve is (Q = 400, P = $0.29).
B)One point on the supply curve is (Q = 400, P = $2.83).
C)One point on the demand curve is (Q = 400, P = $3.12).
D)The socially optimal quantity of gasoline is less than 400 gallons.

Quizplus · Accepted Answer

The supply curve represents the private cost to producers, which is given as $2.83 for the 400th gallon of gasoline. Therefore, a point on the supply curve is (Q = 400, P = $2.83).

Scenario 10-1 The Demand Curve for Gasoline Slopes Downward and the Supply