Figure 10-3

-Refer to Figure 10-3.Which price and quantity combination represents the social optimum
A)P₀ and Q₁
B)P₁ and Q₀
C)P₂ and Q₁
D)P₂ and Q₀

Question

Figure 10-3
 
-Refer to Figure 10-3.Which price and quantity combination represents the social optimum
A)P₀ and Q₁ 
B)P₁ and Q₀ 
C)P₂ and Q₁ 
D)P₂ and Q₀

Quizplus · Accepted Answer

The social optimum occurs where the marginal social benefit intersects the marginal social cost, which is at point C, represented by price P₂ and quantity Q₁. This point maximizes the overall welfare of society, taking into account both the benefit to consumers and the cost to producers.

Figure 10-3 -Refer to Figure 10-3.Which Price and Quantity Combination Represents the Quantity