Figure 8-15
-Refer to Figure 8-15.What is the economically efficient output level?

Question

Figure 8-15 
-Refer to Figure 8-15.What is the economically efficient output level?

Quizplus · Accepted Answer

The economically efficient output level is where marginal cost (MC) equals marginal benefit (MB), which is where the two curves intersect (point E). At this level of output, the firm will produce Q₃ units and charge a price of P1. This is the point where total surplus (consumer surplus + producer surplus) is maximized. Any output level below or above this point will result in lower total surplus.

Figure 8-15 -Refer to Figure 8-15.What Is the Economically Efficient Output Level