The Following Graph Shows Market Equilibrium in the Presence of an Externality

question 31

Multiple Choice

The following graph shows market equilibrium in the presence of an externality. The total social gain from producing the socially efficient output is:​ ​
Figure 17.2
​

• A)$60.
• B)$30.
• C)$6.
• D)$480.
• E)$300.

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Definitions:

German Beer

Refers to beer produced in Germany, known for its quality and variety, and regulated by the Reinheitsgebot, or beer purity law.

American Beer

Typically refers to beer produced in the United States, often characterized by a lighter lager style but also includes a wide variety of craft brews.

Factor Endowments

The quantity and quality of labor, land, and capital that a country possesses, influencing its economic productivity.

Labor

The application of human physical and intellectual labor in the manufacture and provision of goods and services.