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

question 125

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 QMARKET represent the equilibrium quantity of gasoline, and let QOPTIMUM represent the socially optimal quantity of gasoline. Which of the following inequalities is correct?

• A) 1,000 < QOPTIMUM < QMARKET
• B) QOPTIMUM < 1,000 < QMARKET
• C) QMARKET < 1,000 < QOPTIMUM
• D) QOPTIMUM < QMARKET < 1,000

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