Question

If this firm is producing a product which does not generate any externalities,

the allocatively efficient (i.e., producing the optimum mix of output) output
would be the output where:

Select one:

a. Price = MC3

b. Price = MC1 plus Social MC

c. Price = MC1

d. Price = MC2

Answer 1

If this firm is producing a product which does not generate any externalises, the allocatively efficient (i.e., producing the optimum mix of output) output would be the output where: Price = MC1

Option C is correct

Step-by-step explanation:

When there is no externality private marginal cost is equal to social marginal cost at optimum.

If an external advantage or cost is present, the external advantage or cost to a third party apart from the buyer or the vendor of the good is liked or imposed.

The response that no emissions would be best would be known by most people. The maximum emission level is not zero, though, but it is reached in line with our economic decision law that the total gain is equated with marginal investment.