Reference: Ref 10-1 (Table: Costs of Antibiotics) Refer to the table. The market equilibrium quantity is ________ and the efficient equilibrium quantity is ________.

Question

Quizplus · Accepted Answer

The market equilibrium occurs where the quantity demanded equals the quantity supplied at a price of $10. At this price, the quantity demanded is 3 and the quantity supplied is 3, so the market equilibrium quantity is 3. However, the efficient equilibrium occurs where marginal social benefit equals marginal social cost, which is at a quantity of 2. At this quantity, the price is $20 and both the marginal social benefit and marginal social cost are $20. Therefore, the efficient equilibrium quantity is 2.

Reference: Ref 10-1 (Table: Costs of Antibiotics) Refer to the Table