Question 6 of 25 a Sapling Learning macmillan learning The corresponding graph s

Question

Question 6 of 25 a Sapling Learning macmillan learning The corresponding graph shows the relevant curves in the paper production market. Specify your numerical answers to two decimal places In the absence of government intervention, how many reams of paper will be purchased/sold? click to edit Number Social MC ream S What is the efficient amount of paper o Supply or this market should produce? 13.37 Private MC Price Number 10.2 ream S Demand In the absence of government intervention paper is produced to be socially optimal. 5.14 10.64 13.84 19.34 too much Quantity (reams) too little

Explanation / Answer

1. 13.84

In the absence of government intervention, the equilibrium would be determined by the intersection of the private cost curve and the demand curve.

2. 10.64

Efficient production level includes the social cost born by the society. It is determined by the intersection of the demand and the social cost curves.

3. Too much.

Without the government intervention, there is no incentive for the firms to reduce their production level. Costs increases the benefits.

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