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

question 21

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 5-2

-Figure 5-2 illustrates the market for a product that generates an external cost.S₁ is the private market supply curve,while S₂ is the supply curve including the external cost.Which of the following is true?

• A)Relative to economic efficiency,output of the good will be too large and the price too low.
• B)Relative to economic efficiency,output of the good will be too large and the price too high.
• C)Relative to economic efficiency,output of the good will be too small and the price too low.
• D)Relative to economic efficiency,output of the good will be too small and the price too high.

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Definitions:

Overhead Costs

General business costs not directly related to creating a product or service, such as rent, utilities, and insurance.

Management Cycle

A series of business activities and processes that managers use to plan, lead, organize, and control operations.

Implementation Phase

The stage in a project or a business plan where strategies are put into action and operational activities commence.

Codes Of Ethics

A set of guidelines designed to help professionals conduct business honestly and with integrity.