Question

What is the price at which equilibrium is achieved?

a) $8
b) $9
c) ОООО
d) О $10
e) $30

Answer 1

The equilibrium price at which equilibrium is achieved can be determined by looking at the intersection of the quantity demanded and the quantity supplied.

Step-by-step explanation:

The equilibrium price at which equilibrium is achieved can be determined by looking at the intersection of the quantity demanded and the quantity supplied. This intersection point represents the price and quantity at which the market is balanced, with no excess demand or supply. In this case, the question references two different situations - one without paying the costs of the externality, and one after paying the costs of the externality.

First, we look at the situation without paying the costs of the externality. Based on the information provided, the equilibrium price would be $10 and the equilibrium quantity would be 5 units.

Then, we consider the situation after paying the costs of the externality. Using the information given, the equilibrium price would be $12 and the equilibrium quantity would be 4 units.