Exhibit 17-7
-Exhibit 17-7 represents the consumer market for driving their automobiles.If drivers base their driving decisions on the marginal social cost of driving their cars,how many miles will they drive?

Question

Exhibit 17-7 
-Exhibit 17-7 represents the consumer market for driving their automobiles.If drivers base their driving decisions on the marginal social cost of driving their cars,how many miles will they drive?

Quizplus · Accepted Answer

The marginal social cost is equal to the sum of the marginal private cost and the marginal external cost. At 3,000 miles, the marginal social cost is equal to $0.25 (marginal private cost) plus $0.10 (marginal external cost) which equals $0.35. At this point, the marginal social cost intersects with the marginal social benefit, meaning that the social optimal level of driving is 3,000 miles.

Exhibit 17-7 -Exhibit 17-7 Represents the Consumer Market for Driving Their Automobiles.If