Module 4 Test
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Question 20
4 pts
Scenario 10-1
The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the \( 1,000^{\text {th }} \) gallon of gasoline entails the following:
- a private cost of \( \$ 3.10 \);
- a social cost of \( \$ 3.55 \);
- a value to consumers of \( \$ 3.70 \).
Refer to Scenario 10-1. Let Q represent the number of gallons of gasoline and let \( P \) represent the price of a gallon of gasoline. Which of the following statements is correct?
The socially optimal quantity of gasoline is less than 1,000 gallons.
One point on the supply curve is \( (\mathrm{Q}=1,000, \mathrm{P}=\$ 3.10) \).
One point on the social-cost curve is \( (\mathrm{Q}=1,000, \mathrm{P}=\$ 0.45) \).
One point on the demand curve is \( (\mathrm{Q}=1,000, \mathrm{P}=\$ 3.55) \).
