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.
-According to Figure 20-1,the efficient output is ______ than the equilibrium output by _____ units.
A)more;400
B)less;400
C)more;100
D)less;200

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. 
-According to Figure 20-1,the efficient output is ______ than the equilibrium output by _____ units.
A)more;400 
B)less;400 
C)more;100 
D)less;200

Quizplus · Accepted Answer

The efficient output is where the social marginal cost (S₂) intersects with the private demand curve (D₁), which is at point A. The equilibrium output, where the private demand and supply curves intersect, is at point B. The difference between the two outputs is the distance between point A and point B, which is 200 units. Therefore, the efficient output is less than the equilibrium output by 200 units. Option D is the correct answer.

Use the Following Figure to Answer the Question : Figure