The Demand Curve and Supply Curve for a Good Are

question 55

Multiple Choice

The demand curve and supply curve for a good are given by Q^D = 100 - 5P and Q^S = 1.25P - 2.5. Suppose the production of this good generates a negative externality, where the external marginal cost is constant at $2. To achieve the socially optimal output level, the government wants to implement a quota. The size of the quota should be ____ units of the good.

• A) 24
• B) 20
• C) 16
• D) 14

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Definitions:

Intimacy Versus Isolation

A stage in Erik Erikson's theory of psychosocial development where adults face the challenge of forming intimate relationships versus becoming isolated.

Erik Erikson

A psychoanalyst known for his theory on the psychosocial development of human beings.

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The first stage in Erikson's theory of psychosocial development, where infants learn to trust or mistrust their caregivers and the world based on their interactions.

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An individual's subjective evaluation of their own worth, encompassing beliefs about oneself as well as emotional states such as triumph, despair, pride, and shame.