-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.If the Coase theorem can be used in this market,output equals ________ kilowatt hours per day.
A) 0
B) 150 billion
C) 200 billion
D) 100 billion
E) more than 200 billion

Question

-The figure above shows the marginal social cost curve of generating electricity,the marginal private cost curve,and the demand curve.If the Coase theorem can be used in this market,output equals ________ kilowatt hours per day.
A) 0 
B) 150 billion 
C) 200 billion 
D) 100 billion 
E) more than 200 billion

Quizplus · Accepted Answer

The Coase theorem suggests that if there are no transaction costs, parties can negotiate to solve externalities on their own, leading to an efficient outcome. In this context, the efficient outcome is where the marginal social cost curve intersects the demand curve, which is at 150 billion kilowatt hours per day.

-The Figure Above Shows the Marginal Social Cost Curve of Generating