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

Multiple Choice

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. From the given information, it is apparent that

A) the production of gasoline involves a negative externality, so the market will produce a smaller quantity of gasoline than is socially desirable.
B) the production of gasoline involves a negative externality, so the market will produce a larger quantity of gasoline than is socially desirable.
C) the production of gasoline involves a positive externality, so the market will produce a smaller quantity of gasoline than is socially desirable.
D) the production of gasoline involves a positive externality, so the market will produce a larger quantity of gasoline than is socially desirable.