In the Figure Given Below,the Competitive Supply Curve of a Commodity

question 82

Multiple Choice

In the figure given below,the competitive supply curve of a commodity is given by S₁,the private marginal benefit curve is D₁,the marginal social benefit curve is D₂,and the MB_E curve reflects the marginal external benefits.
-Refer to Figure 20-2.If the government provides a subsidy of $8 per unit of output,then the:

• A)marginal social benefit will exceed the marginal social cost and the good will be underproduced.
• B)marginal social cost will exceed the marginal social benefit and the good will be underproduced.
• C)marginal social benefit will exceed the marginal social cost and the good will be overproduced.
• D)marginal social cost will exceed the marginal social benefit and the good will be overproduced.

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Definitions:

Operating Objectives

Short-term goals that an organization aims to achieve, focusing on the daily functioning and operations.

SWOT Analysis

A strategic planning tool that helps organizations identify their Strengths, Weaknesses, Opportunities, and Threats.

Substitute Products

Goods or services that can serve as replacements for each other, satisfying the same customer need or want.

Resource Shortages

Situations where the demand for resources exceeds the supply, leading to operational or strategic challenges in an organization.