The Graph Shown Displays a Market with an Externality

question 91

Multiple Choice

The graph shown displays a market with an externality. Which of the following statements is true?The efficient quantity is 6 units.This shows a negative production externality.The size of the externality is $4 per unit.

• A)I and III only
• B)II only
• C)I only
• D)I, II, and III

---

Definitions:

Wood

A hard, fibrous material derived from trees and used in construction, manufacturing, and as fuel.

Three-Martini Lunches

Informal term for extended business lunches that involve alcohol and are characterized by leisurely pace and socializing, often associated with business discussions.

Millard Fillmore

The 13th President of the United States, serving from 1850 to 1853.

Mount Rushmore

A monumental granite sculpture located in South Dakota, USA, featuring the 60-foot faces of four significant US presidents.