Figure 155 Figure 15

question 205

Multiple Choice

Figure 15.5 Figure 15.5 shows a market with an externality.The current market equilibrium output of Q₁ is not the economically efficient output.The economically efficient output is Q₂.
-Refer to Figure 15.5.If, because of an externality, the economically efficient output is Q₂ and not the current equilibrium output of Q₁, what does D₂ represent?

• A)The demand curve reflecting external benefits
• B)The demand curve reflecting social benefits
• C)The demand curve reflecting private benefits
• D)The demand curve reflecting the sum of social and external benefits

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Definitions:

Truth Table

A tabular representation used in logic to determine the validity of statements by listing all possible scenarios and their corresponding truth values.

Atomic Sentences

Sentences that represent the most basic form of propositions, without any complex or compound elements.

Truth Values

The valuation in logic that indicates whether a statement is true or false.

Truth Table

A mathematical table used to determine if a compound statement is true or false, based on the truth values of its components.