Use the Following Diagram to Answer the Following Questions

question 7

Multiple Choice

Use the following diagram to answer the following questions.

-Refer to Diagram 10-1. When marginal social costs are equal to MSC1:

• A) the equilibrium quantity < socially efficient quantity.
• B) the equilibrium quantity > socially efficient quantity.
• C) the equilibrium quantity = socially efficient quantity.
• D) the argument for government subsidization is weaker than it would be if marginal social costs were equal to MSC2.

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