Use the table below to answer the following questions.
Table 16.2.1

-Refer to Table 16.2.1. Given in the table are the marginal private cost and the marginal social cost of the production of chemical fertilizer and the marginal social benefit from the consumption of fertilizer. If the market is unregulated
A)the quantity produced is the efficient quantity.
B)the quantity produced is greater than the efficient quantity.
C)the quantity produced is less than the efficient quantity.
D)marginal external cost is maximized.
E)production is technologically inefficient.

Question

Use the table below to answer the following questions.
Table 16.2.1
 
-Refer to Table 16.2.1. Given in the table are the marginal private cost and the marginal social cost of the production of chemical fertilizer and the marginal social benefit from the consumption of fertilizer. If the market is unregulated
A)the quantity produced is the efficient quantity. 
B)the quantity produced is greater than the efficient quantity. 
C)the quantity produced is less than the efficient quantity. 
D)marginal external cost is maximized. 
E)production is technologically inefficient.

Quizplus · Accepted Answer

In an unregulated market, producers only consider their private costs when deciding how much to produce, leading to a quantity produced greater than the efficient quantity (where marginal social cost = marginal social benefit). Therefore, there is a negative externality of production (marginal external cost), indicating that the market is not operating efficiently as there is an overproduction of the good.

Use the Table Below to Answer the Following Questions