Skip to content
We use only essential cookies to keep you signed in and remember your preferences. See our Cookie Policy.
TestStop
MocksPracticeResourcesIndiaBlogPricing
Sign in
Questions › IIT JAM › IIT JAM 2023 › Q53
2 marksMicroeconomics › Market failure, externalities and public goods › Externalities and the social optimumHardabout 3 min

IIT JAM 2023 Question 53: Market failure, externalities and public goods

Firm XXX's output creates a benefit of INR 700700700 for YYY and a cost of INR 300300300 for ZZZ per unit. XXX's cost is C(QX)=2QX2+10C(Q_X)=2Q_X^2+10C(QX​)=2QX2​+10, and the market price is INR 160016001600. The difference between the socially optimal output and the private profit-maximising output of XXX (in INR) is ________ (in integer).

Answer and worked solution

Checking your account…

Plain-text version

Firm X 's output creates a benefit of INR 700 for Y and a cost of INR 300 for Z per unit. X 's cost is C(Q_X)=2Q_X²+10, and the market price is INR 1600. The difference between the socially optimal output and the private profit-maximising output of X (in INR) is (in integer).

Also written as: Firm X 's output creates a benefit of INR 700 for Y and a cost of INR 300 for Z per unit. X 's cost is C(Q_X)=2Q_X^2+10, and the market price is INR 1600. The difference between the socially optimal output and the private profit-maximising output of X (in INR) is (in integer).

Market failure, externalities and public goods has come up 114 times in 7 exams since 2006.

What this question tests

This question is on Externalities and the social optimum, part of Market failure, externalities and public goods in Microeconomics.

Costs or benefits that fall on others, and why the private and socially efficient outputs differ.

TestStop has 33 past-paper questions on this subtopic.

Take this paper as a timed mockMore on Externalities and the social optimum

Similar questions from other papers

  • CUET-PG 2026 · Q7The efficient level of output is the level at which price of product is _ marginal social cost (MSC).
  • GATE 2026 · Q32Which one of the following statements regarding externality is TRUE?
  • IIT JAM 2026 · Q19Which one of the following statements is CORRECT in the context of positive consumption externality?
  • UGC-NET 2026 · Q51Key assumptions of Coase theorem are: A. Zero transaction coast and two agents to each bargain B. Competitive market for legal entitlements and perfect knowledge about…
  • CUET-PG 2025 · Q6Which of the following is incorrect about the problem of externalities?

Question from the IIT JAM 2023 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.