**Transcription for Educational Website:****Figure: Output Levels II**The socially optimal output level could be achieved by a government quota of:- ○ 250 units of electricity.- ○ approximately 212 units of electricity.- ○ 175 units of electricity.- ○ 100 units of electricity.**Graph Explanation:**The graph presents the relationship between price and quantity of electricity, with two key curves and a demand line:- **Price Axis (vertical):** Ranges from $0 to $100.- **Quantity of Electricity Axis (horizontal):** Ranges from 0 to 500 units.**Curves:**- **SMC (Social Marginal Cost):** An upward-sloping orange line, indicating the additional cost incurred by society for each additional unit of electricity.- **S = MC (Supply equals Marginal Cost):** A red upward-sloping line, usually representing the supply curve in traditional economic models.- **D (Demand):** A downward-sloping blue line, reflecting the relationship between price and the quantity demanded by consumers.The socially optimal output level is where the **SMC** intersects with the **D** curve, suggesting the production level where social costs and consumer demand are balanced. The graph suggests this point is approximately 212 units of electricity.

The socially optimal point is where the allocation of resources maximizes overall societal welfare,…

(Figure: Output Levels II) The socially optimal output level could be achieved by a government quota of: Price ($) 100 80 60 40 20 SMC S = MC 100 200 300 400 500 Quantity of electricity 250 units of electricity. approximately 212 units of electricity. 175 units of electricity. 100 units of electricity.

(Figure: Output Levels II) The socially optimal output level could be achieved by a government quota of: Price ($) 100 80 60 40 20 SMC S = MC 100 200 300 400 500 Quantity of electricity 250 units of electricity. approximately 212 units of electricity. 175 units of electricity. 100 units of electricity.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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