Figure 155 Figure 15

question 126

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.Suppose the current market equilibrium output of Q₁ is not the economically efficient output because of an externality.The economically efficient output is Q₂.In that case, diagram shows

• A)the effect of a subsidy granted to producers of a good.
• B)the effect of an excess demand in a market.
• C)the effect of a positive externality in the consumption of a good.
• D)the effect of a negative externality in the consumption of a good.

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Definitions:

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Handwrote

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