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

question 99

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)Point a illustrates the competitive private market outcome,while point b illustrates the outcome consistent with economic efficiency.
• B)Point b illustrates the competitive private market outcome,while point a illustrates the outcome consistent with economic efficiency.
• C)The competitive private market outcome is consistent with the conditions for economic efficiency.
• D)The good will tend to be oversupplied relative to the conditions for economic efficiency.

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