The figure given below shows the demand and supply curves of steel.S p is the private supply curve,and S s is the social supply curve that includes both private costs and external costs. Figure 13.2
-According to Figure 13.2:

Question

The figure given below shows the demand and supply curves of steel.S p is the private supply curve,and S s is the social supply curve that includes both private costs and external costs. Figure 13.2  
-According to Figure 13.2:

Quizplus · Accepted Answer

Point a represents the private equilibrium where demand and the private supply curve intersect. Point b represents the social equilibrium where demand intersects with the social supply curve that includes both private costs and external costs. Therefore, point a represents the private equilibrium, whereas point b represents the social equilibrium. Hence, option D is the correct answer.

Option A is incorrect because only point b is socially efficient and not point a.

Option B is incorrect because point b is socially efficient.

Option C is incorrect because point a represents the private equilibrium and not the social equilibrium.

Option E is incorrect because it is a statement about the socially efficient output level when external costs are zero, which is not directly related to the question asked.

The Figure Given Below Shows the Demand and Supply Curves