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Figure: Market for Bathroom Cleaner
-(Figure: Market for Bathroom Cleaner) Refer to the figure. The figure shows a market for cans of a bathroom cleaner that causes environmental damage, imposing costs on people other than the consumers and producers of the cleaner. What is the efficient quantity in this market?
A) 100
B) 85
C) 15
D) 9

Question

Use the following to answer questions:
Figure: Market for Bathroom Cleaner 
-(Figure: Market for Bathroom Cleaner) Refer to the figure. The figure shows a market for cans of a bathroom cleaner that causes environmental damage, imposing costs on people other than the consumers and producers of the cleaner. What is the efficient quantity in this market?
A) 100 
B) 85 
C) 15 
D) 9

Quizplus · Accepted Answer

The efficient quantity is where marginal social cost (MSC) equals marginal social benefit (MSB), which is at Q=85. At this point, the sum of consumer surplus and producer surplus is maximized, while the cost of the negative externality is minimized. Therefore, choice B is the best choice.

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