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,if the efficient output is being produced,the market price of the commodity must be:
A)$12.
B)$17.
C)$20.
D)$24.

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,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 achieved at the point where the marginal social benefit (MSB) equals the marginal social cost (MSC). In the figure, the MSC is given by the supply curve S₁, which intersects the MSB curve (D₂) at point E. Therefore, the efficient output is produced at point E, where the output quantity is Q1 and the market price is $20.

Use the Following Figure to Answer the Question : Figure