In the Following Graph, MPC and MSC Represent the Marginal

question 4

Multiple Choice

In the following graph, MPC and MSC represent the marginal private cost and marginal social cost of producing a good respectively. QD represents the demand for the good. Refer to the graph to answer the question. Which of the following statements is true?

• A) The MPC of production is greater than the MSC of producing the good.
• B) The quantity of the good produced in the market will be higher than the socially optimal
• C) For the market to produce the socially optimal level of output, the government should provide a subsidy.
• D) There is a positive externality associated with the production and consumption of this