Demand curve for gasoline slopes downward

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The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 1,000th gallon of gasoline entails the following:

  • a private cost of $3.10; a social cost of $3.55;
  • a value to consumers of $3.70.

Let QMARKET represent the equilibrium quantity of gasoline, and let QOPTIMUM represent the socially optimal quantity of gasoline. Which of the following inequalities is correct?

A. QMARKET < 1,000 < QOPTIMUM 

B. QOPTIMUM < 1,000 < QMARKET 

C. QOPTIMUM < QMARKET < 1,000 

D. 1,000 < QOPTIMUM < QMARKET

Reference no: EM131400822

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