Figure 10-9
-Refer to Figure 10-9, Panel (b). The market equilibrium quantity is
A)Q2, which is the socially optimal quantity.
B)Q3, which is the socially optimal quantity.
C)Q2, and the socially optimal quantity is Q3.
D)Q3, and the socially optimal quantity is Q2.

Question

Figure 10-9   
-Refer to Figure 10-9, Panel (b). The market equilibrium quantity is
A)Q2, which is the socially optimal quantity. 
B)Q3, which is the socially optimal quantity. 
C)Q2, and the socially optimal quantity is Q3. 
D)Q3, and the socially optimal quantity is Q2.

Quizplus · Accepted Answer

The market equilibrium quantity is Q3, but the socially optimal quantity, considering externalities, is Q2.