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

A) 400 < Q_OPTIMUM < Q_MARKET
B) Q_OPTIMUM < 400 < Q_MARKET
C) Q_MARKET < 400 < Q_OPTIMUM
D) Q_OPTIMUM < Q_MARKET < 400

Correct Answer:

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