Refer to the Above Supply and Demand Graph

question 123

Multiple Choice

Refer to the above supply and demand graph.Point A represents the current equilibrium level of output of this product and point B represents the optimal level of output from society's perspective.This supply and demand graph indicates that there is (are) :

• A) spillover benefits to the production of this product.
• B) spillover costs to the production of this product.
• C) an overallocation of resources to the production of this product.
• D) a negative externality from the production of this product.

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Definitions:

Price

The amount of money required to purchase a good or service.

Marginal Costs

The change in total costs that arises when the quantity produced is incremented by one unit; it is the cost of producing one more unit of a good.

Potential Customers

Individuals or businesses that have not yet purchased but have shown interest in a company's products or services.

Expected Profit

The anticipated financial gain from an investment or business activity, considering possible risks and rewards.