The following graph shows market equilibrium in the presence of an externality in an economy. The equilibrium level of output for the firm is _____.Figure 17.1 Show Transcribed Text a. 0 units b. between 0 and 100 units c. 160 units d. 100 units e. between 100 and 160 units The diagram presented is a simple economic model illustrating the relationship between price and quantity, depicting the marginal social cost (MSC) and demand (D).### Graph Explanation:- **Axes**: - The vertical axis represents "Price $/unit," indicating the price level per unit of the good or service. - The horizontal axis denotes "Quantity," illustrating the quantity of goods or services produced and consumed.- **Lines**: - The **MSC** line is horizontal, indicating a constant marginal social cost at $50 per unit. - The **D** line slopes downward from left to right, indicating that as the price decreases, the quantity demanded increases.- **Intersection Points**: - The MSC intersects the vertical line at a price of $50 and a quantity of 100 units. - The demand curve intersects the MSC at a price of $40 and a quantity of 160 units.This model is typically used to show how social costs affect market outcomes and the balance between demand and supply in economics.

In the language of economics, equilibrium is a state or situation in which supply and demand in a…

Answered: The following graph shows market…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The following graph shows market equilibrium in the presence of an externality in an economy. The equilibrium level of output for the firm is _____.

Figure 17.1

Show Transcribed Text

a. 0 units

b. between 0 and 100 units

c. 160 units

d. 100 units

e. between 100 and 160 units

The diagram presented is a simple economic model illustrating the relationship between price and quantity, depicting the marginal social cost (MSC) and demand (D).

### Graph Explanation:

- **Axes**:
- The vertical axis represents "Price $/unit," indicating the price level per unit of the good or service.
- The horizontal axis denotes "Quantity," illustrating the quantity of goods or services produced and consumed.

- **Lines**:
- The **MSC** line is horizontal, indicating a constant marginal social cost at $50 per unit.
- The **D** line slopes downward from left to right, indicating that as the price decreases, the quantity demanded increases.

- **Intersection Points**:
- The MSC intersects the vertical line at a price of $50 and a quantity of 100 units.
- The demand curve intersects the MSC at a price of $40 and a quantity of 160 units.

This model is typically used to show how social costs affect market outcomes and the balance between demand and supply in economics.

Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

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