Answered

IDNLearn.com connects you with a community of experts ready to answer your questions. Ask any question and get a thorough, accurate answer from our community of experienced professionals.

The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 200th gallon of gasoline entails the following:
• a private cost of $3.03;
• a social cost of $3.23;
• a value to consumers of $3.39.
Refer to Scenario 10-1. Suppose the equilibrium quantity of gasoline is 220 gallons; that is, Q MARKET = 220. Then the equilibrium price of a gallon could be:________
a. $3.08.
b.$2.77.
c. $2.45.
d. $3.69.

Sagot :

Abiolataiwo2015idn

Answer:

a. $3.08

Explanation:

Calculation to determine what the equilibrium price of a gallon could be:

Based on the information given the Private cost is $3.03 while the Social cost is $3.23 which indicates that Social cost lies ABOVE the private cost and since The MARKET EQUILIBRIUM tend to occurs when Private value=Private cost which means that the EQUILIBRIUM PRICE lies between $3.03 and $3.23, Therefore the EQUILIBRIUM PRICE of a gallon would be $3.08 because it lies between $3.03 and $3.23.

We are delighted to have you as part of our community. Keep asking, answering, and sharing your insights. Together, we can create a valuable knowledge resource. Find clear answers at IDNLearn.com. Thanks for stopping by, and come back for more reliable solutions.