Use the following figure to answer the question : Figure 20-1 : D 1 and S 1 are the private demand and supply curves,of a commodity produced by a competitive firm.S 2 reflects the social marginal cost of production,while S 0 represents the external marginal cost.
-Refer to Figure 20-1.When the efficient output is being produced,the price of the good must be:
A)$90.
B)$108.
C)$100.
D)$40.

Question

Use the following figure to answer the question : Figure 20-1 : D 1 and S 1 are the private demand and supply curves,of a commodity produced by a competitive firm.S 2 reflects the social marginal cost of production,while S 0 represents the external marginal cost. 
-Refer to Figure 20-1.When the efficient output is being produced,the price of the good must be:
A)$90. 
B)$108. 
C)$100. 
D)$40.

Quizplus · Accepted Answer

When the efficient output is being produced, the price of the good is determined by the intersection of the social marginal cost curve (S₂) and the private demand curve (D₁). This occurs at a price of $100, which is the answer choice C.

Use the Following Figure to Answer the Question : Figure