Scenario 10-1 The Demand Curve for Gasoline Slopes Downward and the Supply

question 122

Multiple Choice

Scenario 10-1
The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 1,000^th gallon of gasoline entails the following:
• a private cost of $3.10;
• a social cost of $3.55;
• a value to consumers of $3.70.
-Refer to Scenario 10-1. Let Q_MARKET represent the equilibrium quantity of gasoline, and let Q_OPTIMUM represent the socially optimal quantity of gasoline. Which of the following inequalities is correct?

• A)1,000 < Q_OPTIMUM < Q_MARKET
• B)Q_OPTIMUM < 1,000 < Q_MARKET
• C)Q_MARKET < 1,000 < Q_OPTIMUM
• D)Q_OPTIMUM < Q_MARKET < 1,000

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Definitions:

Per Capita Energy Use

The average amount of energy consumed per person within a specific geographical area.

Total Fertility Rate

The average number of children that would be born per woman over her lifetime if she were to experience the exact current age-specific fertility rates throughout her childbearing years.

Preceding Generation

The generation that came before the current one, often referred to in discussions of societal change, inheritance, or historical context.

Electricity Generation

The process of producing electrical power through various means such as thermal, hydro, nuclear, wind, and solar energy conversion.