The following questions are based on the graph provided, whi…
Questions
The fоllоwing questiоns аre bаsed on the grаph provided, which shows the marginal private cost (MPC), marginal social cost (MSC), marginal private benefit (MPB), and marginal social benefit (MSB) in a market for a good that has an external cost. The figure shows the graph of three curves in the first quadrant of a coordinate plane. The horizontal axis is labeled “Quantity,” and the values 6, 9, and 12 are indicated. The vertical axis is labeled “Price, Cost, in dollars,” and the values 0, a break, and 4.50 through 5.50, in increments of 0.25, are indicated. The three curves are labeled M S B equals M P B, M S C, and M P C. The M S B equals M P B curve begins just to the left of a quantity of 6, and above a price of 5.50, and moves downward and to the right in a straight line. It passes through the points with coordinates 6 comma 5.50, 9 comma 5.25, and 12 comma 5.00. It ends far to the right of quantity 12, slightly below price 4.50. The M S C curve begins about halfway between a quantity of 0 and 6, at price of 4.75, and moves upward and to the right in a straight line. It passes through the point with coordinates 6 comma 5.00, intersects the M S B equals M P B at the point with coordinates 9 comma 5.25, and passes through the point with coordinates 12 comma 5.50. It ends to the right of quantity 12 and above price 5.50. The M P C curve begins to the left of quantity 6, just below price 4.50, and moves upward and to the right in a straight line, parallel to the M S C curve. It passes through the points with coordinates 6 comma 4.50, and 9 comma 4.75, and it intersects M S B equals M P B curve at the point with coordinates 12 comma 5.00. It ends to the right of quantity 12, and slightly above price 5.25. What are the socially efficient and market equilibrium quantities?