Refer to the Provided Supply and Demand Graph

question 4

Multiple Choice

Refer to the provided supply and demand graph. S1 and D1 represent the current market supply and demand, respectively. S2 and D2 represent the socially optimal supply and demand. The positions
Of the graphs indicate that there are

• A) external benefits from production and external costs from consumption of the product.
• B) external costs from production and external benefits from consumption of the product.
• C) external benefits from production and consumption of the product.
• D) external costs from production and consumption of the product.

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Definitions:

Prejudice

Preconceived opinion or bias, often negative, towards people, groups, or subjects, based on stereotypes rather than individual merit.

Groupthink

A psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.

Group Polarisation

The tendency for a group to make decisions that are more extreme than the initial inclination of its members.

Extreme Decisions

Extreme decisions refer to choices made under conditions of high risk, uncertainty, or pressure, often with significant consequences.