Figure 15-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 15-15.What is the economically efficient output level and what is the price at that level?
A)Q4,P1
B)Q3,P2
C)Q2,P2
D)Q2,P3

Question

Figure 15-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 15-15.What is the economically efficient output level and what is the price at that level?
A)Q4,P1 
B)Q3,P2 
C)Q2,P2 
D)Q2,P3

Quizplus · Accepted Answer

The economically efficient output level is where marginal cost equals marginal benefit. This occurs at Q4, where the marginal cost curve intersects the marginal benefit curve. The price at that level is P1, which is the height of the demand curve at Q4.

Figure 15-15 Shows the Cost and Demand Curves for the Erickson