The Diagram Below Shows Demand and Supply Curves for Some

question 52

Multiple Choice

The diagram below shows demand and supply curves for some perfectly competitive market. FIGURE 16-2
-Refer to Figure 16-2.Suppose that the marginal benefit curve (MB) includes all social benefits and that there is a negative externality in production.In this case,________ for allocative efficiency.

• A)P₁ and Q₁ are appropriate
• B)the price P₁ is appropriate but the quantity Q₁ is too low
• C)the price P₁ is appropriate but the quantity Q₁ is too high
• D)the price P₁ is too low and the quantity Q₁ is too high
• E)the price P₁ is too high and the quantity Q₁ is too low

---

Definitions:

First Quarterly Journal

A periodical report covering the initial three months of the fiscal year, often containing financial statements, performance evaluations, and future outlooks.

Liabilities

Financial obligations or debts owed by a business to external parties or stakeholders.

Current Liabilities

Short-term financial obligations due within one year or within the company's operating cycle, whichever is longer.

Long-Term Liabilities

Financial obligations of a company that are due beyond one year, such as bonds payable, long-term loans, and lease liabilities.