Suppose That a Private Firm Is Supplying a Collective Good

question 130

Multiple Choice

Suppose that a private firm is supplying a collective good to a market with demand of P = 24 - 3Q.If the marginal cost of providing this good is zero but the firm charges $18,the actual equilibrium output is __________ units,while the socially efficient output is __________ units.

• A) 2;8
• B) 6;8
• C) 2;2
• D) 4;2
• E) 2;4

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Definitions:

Red Beryl

A rare mineral that is red in color and is composed of beryllium, aluminum, and silicate.

Monopoly Power

The ability of a single seller in a market to control the prices of goods or services, usually due to lack of competition.

Local Water Company

A utility firm responsible for the supply and management of water within a specific local area.

Natural Monopoly

A market structure where a single firm can provide a product or service at a lower cost than any potential competitor, often due to economies of scale.