Table 10-1 the Following Table Shows the Private Value, Private Cost, and Cost

question 279

Multiple Choice

Table 10-1
The following table shows the private value, private cost, and external cost for various quantities of output in a market.

-Refer to Table 10-1. Which of the following statements is correct?

• A) If the external benefit per unit of output were $0 instead of $2, then the socially efficient quantity of output would be 4 units.
• B) A tax of $4 per unit would enable this market to move from the equilibrium quantity of output to the socially optimal level of output.
• C) Taking the external cost into account, total surplus declines when the 3rd unit of output is produced and consumed.
• D) The market for flu shots is a market to which the concepts in this table apply very well.

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Definitions:

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