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. Suppose the equilibrium quantity of gasoline is 440 gallons; that is, Q_MARKET = 440. Then the equilibrium price of a gallon could be

Question

Quizplus · Accepted Answer

The equilibrium price is likely to be close to the value to consumers ($3.23) and the private cost ($2.83), but since the equilibrium quantity is higher than the 400th gallon, the price should adjust to balance supply and demand, making $2.88 a reasonable estimate.

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