Use the following figure to answer the question : Figure 20-2 : shows 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,the efficient output is:
A)700 units.
B)400 units.
C)300 units.
D)0 units.

Question

Use the following figure to answer the question : Figure 20-2 : shows 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,the efficient output is:
A)700 units. 
B)400 units. 
C)300 units. 
D)0 units.

Quizplus · Accepted Answer

The efficient output is typically determined by the point where marginal cost (MC) equals marginal benefit (MB), representing the optimal allocation of resources. Without seeing Figure 20-2, we can't identify the specific point, but the principle of efficiency in economics suggests that the efficient output is not zero and is determined by the intersection of supply and demand curves or MC and MB curves. Assuming choice B (400 units) is identified based on this principle, it would be considered the efficient output level.

Use the Following Figure to Answer the Question : Figure