Refer to the Provided Supply and Demand Graph of Product

question 141

Multiple Choice

Refer to the provided supply and demand graph of Product X. If there are positive externalities from the consumption of Product X, then the socially optimal demand curve would be

• A) to the left of the D curve on the graph.
• B) to the right of the D curve on the graph.
• C) at the position of the D curve on the graph.
• D) an upward-sloping line.

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Definitions:

Supply and Demand

Economic principles that describe the relationship between the availability of a good and the desire for that good, affecting its price.

Component Firms

Companies that supply parts or services to other businesses in the production process.

End Customer

The final consumer of a product or service who does not intend to resell it; the ultimate user in the distribution chain.

Value

The importance, worth, or usefulness of something, perceived by individuals or markets, often influencing decisions and preferences.