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

question 394

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 represent the number of gallons of gasoline and let P represent the price of a gallon of gasoline. Which of the following statements is correct?

• A)One point on the social-cost curve is (Q = 1,000, P = $0.45).
• B)One point on the supply curve is (Q = 1,000, P = $3.10).
• C)One point on the demand curve is (Q = 1,000, P = $3.55).
• D)The socially optimal quantity of gasoline is less than 1,000 gallons.

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