Figure 13.9

Figure 13.9 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 13.9.What is the economically efficient output level and what is the price at that level?
A) Q₄; P₁
B)Q₃; P₂
C)Q₂; P₂
D)Q₂; P₃

Question

Figure 13.9
  
Figure 13.9 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 13.9.What is the economically efficient output level and what is the price at that level?
A) Q₄; P₁ 
B)Q₃; P₂ 
C)Q₂; P₂ 
D)Q₂; P₃

Quizplus · Accepted Answer

The economically efficient output level is where marginal cost (MC) equals marginal benefit (MB). In Figure 13.9, this occurs at output level Q₄, where the MC curve intersects the MB curve. The price at that level is P₁, which is the price that consumers are willing to pay for that quantity of output.

Figure 13.9 Figure 13.9 Shows the Cost and Demand Curves for the and Demand