In the figure given below,the competitive supply curve of a commodity is given by S 1 ,the private marginal benefit curve is D 1 ,the marginal social benefit curve is D 2 ,and the MB E curve reflects the marginal external benefits.
-In Figure 20-2,if the efficient output is being produced,the market price of the commodity must be:
A)$12.
B)$17.
C)$20.
D)$24.

Question

In the figure given below,the competitive supply curve of a commodity is given by S 1 ,the private marginal benefit curve is D 1 ,the marginal social benefit curve is D 2 ,and the MB E curve reflects the marginal external benefits. 
-In Figure 20-2,if the efficient output is being produced,the market price of the commodity must be:
A)$12. 
B)$17. 
C)$20. 
D)$24.

Quizplus · Accepted Answer

The efficient output is produced where marginal cost equals marginal benefit, which typically corresponds to the market price. If $20 is the price where this condition is met, it is the efficient price.

In the Figure Given Below,the Competitive Supply Curve of a Commodity