Figure 5-1 Figure 5-1 Shows a Market with an Externality

question 154

Multiple Choice

Figure 5-1 Figure 5-1 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 5-1. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does S2 represent?

• A) the market supply curve reflecting private cost
• B) the market supply curve reflecting social cost
• C) the market supply curve reflecting external cost
• D) the market supply curve reflecting implicit cost

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Definitions:

Peripheral Neuropathy

A condition resulting from damage to the peripheral nerves, causing weakness, numbness, and pain, typically in the hands and feet.

Chorea

A neurological disorder marked by involuntary, rapid, irregular movements, affecting the face, feet, and hands, often associated with Huntington's disease.

Jerky Movements

Sudden, quick movements that are not smooth or controlled, often unintentional and possibly indicative of a neurological disorder.

Athetosis

A type of motor disorder characterized by slow, involuntary, convoluted, writhing movements of the fingers, arms, legs, or neck.