Use the Figure Below to Answer the Following Question(s)

question 61

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 5-3
-Figure 5-3 illustrates the market for a product that generates an external benefit. D₁ is the private market demand curve, while D₂ is the demand curve including the external benefit. Which of the following is true?

• A) Relative to economic efficiency, output of the good will be too large and the price too low.
• B) Relative to economic efficiency, output of the good will be too large and the price too high.
• C) Relative to economic efficiency, output of the good will be too small and the price too low.
• D) Relative to economic efficiency, output of the good will be too small and the price too high.

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Definitions:

Sales Promotion Tool

Various techniques used to boost the sale of products or services, including discounts, coupons, and demonstrations.

Contests

Sales promotions in which consumers compete against one another and must demonstrate skill to win.

Sponsorships

Financial or material support provided to events, activities, or individuals, often in exchange for advertising or promotional benefits.

Social Media Marketing

Marketing practice that uses combinations of digital tools such as websites, online videos, e-mail, blogs, social media, mobile ads, mobile apps, and other digital platforms.