Multiple Choice
The production of toilet paper in a perfectly competitive market is characterized by the inverse supply curve (marginal cost curve) P = 4Q, where Q is measured in millions of 4-roll packs per month. The inverse demand for toilet paper is P = 10 - 6Q. If the production of toilet paper causes an external marginal cost of 50 cents per 4-pack, the socially optimal price of toilet paper is $____ and the socially optimal quantity of toilet paper is ____ million.
A) 4; 1
B) 4.30; 0.95
C) 4.20; 1.05
D) 3; 2
Correct Answer:
Verified
Correct Answer:
Verified
Q14: (Table: Benefits and Costs of Lawn Mowing)
Q15: The production of toilet paper in a
Q16: (Table: Pollution from Firms) Suppose that each
Q17: Recreation centers offer a place for young
Q18: Hamid and Lee are neighbors. Hamid has
Q20: The following companies all manufacture widgets and
Q21: Assume the social marginal benefit of remote-control
Q22: (Figure: Efficient Quantities and Consumers) Suppose that
Q23: What is the nature of the positive
Q24: The marginal cost of pollution is MC