Marginal production of gasoline has a private cost of $3.10, a social cost of $3.55, and a value to consumers of $3.70. From the given information, it is apparent that a. the production of gasoline involves a negative externality, so the market will produce a smaller quantity of gasoline than is socially desirable.
b. the production of gasoline involves a negative externality, so the market will produce a larger quantity of gasoline than is socially desirable.
c. the production of gasoline involves a positive externality, so the market will produce a smaller quantity of gasoline than is socially desirable.
d. the production of gasoline involves a positive externality, so the market will produce a larger quantity of gasoline than is socially desirable.