Figure 10-6 -Refer to Figure 10-6. Which Quantity Represents the Socially-Optimal Quantity

Multiple Choice

Figure 10-6
-Refer to Figure 10-6. Which quantity represents the socially-optimal quantity of output in this market?

A) Q
B) Q'
C) Either Q or Q'. It is necessary to know whether the externality is positive or negative to determine the socially-optimal quantity.
D) Some quantity between Q and Q'. The socially-optimal quantity depends on the negotiating skills of the interested parties.