A Shift from S₁ to S₂ Reflects the Change That

question 297

Multiple Choice

A shift from S₁ to S₂ reflects the change that happens when a negative externality is taken into account. A shift from D₁ to D₂ reflects the change that happens when a positive externality is taken into account.
-Refer to the above figures. An external benefit exists. This will lead to a(n)

• A) underproduction equal to minus .
• B) overproduction equal to minus .
• C) underproduction equal to minus .
• D) overproduction equal to minus .

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Definitions:

Costs

The expenses incurred in the process of producing or providing goods and services.

Efficiency Standpoint

A perspective from which actions are evaluated based on their ability to achieve the highest output with the least waste of resources.

Economic Action

Any decision or behavior by individuals or organizations that involves the generation, distribution, and consumption of goods and services.

Costs

The value of resources sacrificed to achieve a particular objective, such as producing goods or services.