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

question 112

Multiple Choice

Scenario 10-1
The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 400th gallon of gasoline entails the following:
a private cost of $2.83;
a social cost of $3.12;
a value to consumers of $3.23.
-Refer to Scenario 10-1. From the given information, it is apparent that

• A)the production of gasoline involves a negative externality, so the market will produce a smaller quantity of gasoline than is socially desirable.
• B)the production of gasoline involves a negative externality, so the market will produce a larger quantity of gasoline than is socially desirable.
• C)the production of gasoline involves a positive externality, so the market will produce a smaller quantity of gasoline than is socially desirable.
• D)the production of gasoline involves a positive externality, so the market will produce a larger quantity of gasoline than is socially desirable.

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A mathematical operator used to find the remainder of a division between two numbers.

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