Refer to the Below Diagram of the Market for Product

question 33

Multiple Choice

Refer to the below diagram of the market for product X.Curve S_t embodies all costs (including spillovers) and D_t embodies all benefits (including spillovers) associated with the production and consumption of X.Assuming the equilibrium output is Q₁, we can conclude that the existence of spillover:

• A)costs have resulted in an over-allocation of resources to X.
• B)benefits have resulted in an over-allocation of resources to X.
• C)costs have resulted in an under-allocation of resources to X.
• D)benefits have resulted in an under-allocation of resources to X.

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Definitions:

Scots

People originating from Scotland, a country that is part of the United Kingdom, with a rich cultural heritage including traditions, languages, and historical contributions.

North America

A continent in the Northern Hemisphere and almost entirely within the Western Hemisphere, including countries such as Canada, the United States, and Mexico.

Slave Codes

Laws established in the colonial and antebellum South to define the status of slaves and codify the denial of basic civil rights to them.

Free Blacks

African Americans who were not enslaved before the abolition of slavery, living in both the North and South, facing systemic racism and discrimination.