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

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. 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 = 400, P = $0.29) .
B) One point on the supply curve is (Q = 400, P = $2.83) .
C) One point on the demand curve is (Q = 400, P = $3.12) .
D) The socially optimal quantity of gasoline is less than 400 gallons.

Correct Answer:

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