The diagram to the right depicts the market for cough medicine in a small town. The quantity of cough medicine is measured in bottles sold per week; price is measured in dollars. The townspeople are happier and healthier because people who have colds and flus buy and take the medicine and reduce the spread of infection. What is the socially optimal number and price of cough medicine? $28 $24- .... The socially optimal equilibrium occurs at a quantity of bottle(s) and a price of $. $20- $16- $12-$11 $10 $8- $4- 16 20 10 $0-

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If the equilibrium quantity of a good is also the socially optimal quantity, then: Multiple Choice the marginal benefit to consumers of another unit of the good is zero. the marginal cost to producers of another unit of the good is zero. total economic surplus has been maximized. it's possible to make at least one person better off without hurting anyone else.

Which of the following statements is correct?     a.) Economic analyses can often do a reasonable job of evaluating the net benefits from some re-allocation of environmental resources. Policymakers should thus feel comfortable in choosing among alternative policies according to whichever one yields the highest net benefits.   b.)Basic benefit-cost analysis, as typically practiced in the U.S., assumes that the marginal value of an extra dollar of net benefits is the same for everyone.   c.)All socially optimal allocations are efficient, but the reverse is not true.   d.)There is always a tradeoff between efficiency and equity. A reallocation of environmental resources that improves efficiency cannot also improve equity, and vice versa.