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A Shift from S1 to S2 Reflects the Change That

question 177

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  A shift from S<sub>1</sub> to S<sub>2</sub> reflects the change that happens when a negative externality is taken into account. A shift from D<sub>1</sub> to D<sub>2</sub> reflects the change that happens when a positive externality is taken into account. -Refer to the above figures. Which of the panels would be consistent with the situation in which external costs exist? A)  Panel 1 B)  Panel 2 C)  Panels 1 and 2 D)  Neither panel A shift from S1 to S2 reflects the change that happens when a negative externality is taken into account. A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account.
-Refer to the above figures. Which of the panels would be consistent with the situation in which external costs exist?


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