Figure 10-15
Figure 10-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 10-15.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 10-15
  Figure 10-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 10-15.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 Q₂, where the marginal cost (MC) curve intersects the marginal benefit (MB) curve. At this level, the price is P₂, which is the height of the demand curve at Q₂.

Figure 10-15 Figure 10-15 Shows the Cost and Demand Curves