In the table above, the socially optimal level of production would bea. 8 units.b. 4 units.c. 5 units.d. 7 units.e. 6 units. **Table: Economic Analysis of Output per Hour**This table illustrates the relationship between output per hour and various economic measures, including private marginal cost, private marginal benefit, and external benefit. | Output per Hour | Private Marginal Cost | Private Marginal Benefit | External Benefit ||-----------------|-----------------------|--------------------------|------------------|| 1 | $5.00 | $8.00 | $0.10 || 2 | $5.20 | $6.50 | $0.20 || 3 | $5.45 | $5.45 | $0.35 || 4 | $5.75 | $5.15 | $0.60 || 5 | $6.10 | $4.50 | $0.90 || 6 | $6.50 | $4.20 | $1.40 || 7 | $7.20 | $4.00 | $2.00 || 8 | $8.00 | $3.50 | $2.80 |**Explanation:**- **Output per Hour**: This column indicates the quantity of output produced in an hour, ranging from 1 to 8 units.- **Private Marginal Cost**: This is the cost incurred by the producer for each additional unit of output. It increases progressively from $5.00 at 1 unit to $8.00 at 8 units.- **Private Marginal Benefit**: This represents the benefit that the producer receives from each additional unit of output. It decreases from $8.00 at 1 unit to $3.50 at 8 units.- **External Benefit**: This column reflects the benefit to third parties or society from each additional unit of output. It increases from $0.10 at 1 unit to $2.80 at 8 units, highlighting the growing societal benefit with increased production.This data is essential for analyzing the balance between private incentives and societal benefits, providing insights into efficient production levels from an economic perspective.

Socially optimal level of production is obtained where social marginal cost matches social marginal…

Answered: In the table above, the socially…

In the table above, the socially optimal level of production would be a. 8 units. b. 4 units. c. 5 units. d. 7 units. e. 6 units.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

100%

In the table above, the socially optimal level of production would be

a. 8 units.

b. 4 units.

c. 5 units.

d. 7 units.

e. 6 units.

**Table: Economic Analysis of Output per Hour**

This table illustrates the relationship between output per hour and various economic measures, including private marginal cost, private marginal benefit, and external benefit.

| Output per Hour | Private Marginal Cost | Private Marginal Benefit | External Benefit |
|-----------------|-----------------------|--------------------------|------------------|
| 1 | $5.00 | $8.00 | $0.10 |
| 2 | $5.20 | $6.50 | $0.20 |
| 3 | $5.45 | $5.45 | $0.35 |
| 4 | $5.75 | $5.15 | $0.60 |
| 5 | $6.10 | $4.50 | $0.90 |
| 6 | $6.50 | $4.20 | $1.40 |
| 7 | $7.20 | $4.00 | $2.00 |
| 8 | $8.00 | $3.50 | $2.80 |

**Explanation:**

- **Output per Hour**: This column indicates the quantity of output produced in an hour, ranging from 1 to 8 units.

- **Private Marginal Cost**: This is the cost incurred by the producer for each additional unit of output. It increases progressively from $5.00 at 1 unit to $8.00 at 8 units.

- **Private Marginal Benefit**: This represents the benefit that the producer receives from each additional unit of output. It decreases from $8.00 at 1 unit to $3.50 at 8 units.

- **External Benefit**: This column reflects the benefit to third parties or society from each additional unit of output. It increases from $0.10 at 1 unit to $2.80 at 8 units, highlighting the growing societal benefit with increased production.

This data is essential for analyzing the balance between private incentives and societal benefits, providing insights into efficient production levels from an economic perspective.

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