Exhibit 17.1

-Refer to Exhibit 17.1,which shows a market for electricity.The total social gain from basing production on marginal social cost is reflected by _____
A)triangle area abc.
B)rectangle area abcd.
C)50 million kilowatt-hours.
D)75 million kilowatt-hours.
E)demand curve D.

Question

Exhibit 17.1
 
-Refer to Exhibit 17.1,which shows a market for electricity.The total social gain from basing production on marginal social cost is reflected by _____
A)triangle area abc. 
B)rectangle area abcd. 
C)50 million kilowatt-hours. 
D)75 million kilowatt-hours. 
E)demand curve D.

Quizplus · Accepted Answer

The total social gain from basing production on marginal social cost is reflected by the triangle area abc, which represents the consumer surplus, producer surplus, and net gain to society from producing at the efficient output level. Rectangular area abcd represents the total cost of production, including the external costs not reflected in the marginal cost curve. The quantities of electricity produced and the demand curve are not indicative of the total social gain.

Exhibit 17.1 -Refer to Exhibit 17.1,which Shows a Market for Electricity.The Total