The Graphs Below Refer to Two Separate Product Markets

Multiple Choice

The graphs below refer to two separate product markets.Assume that society's optimal level of output in each market is Q₀ and that government purposely shifts the market supply curve from S to S₁in diagram (a) and from S to S₂ in diagram (b) .We can conclude that the government is correcting for:

A) negative externalities in diagram (a) and positive externalities in diagram (b) .
B) positive externalities in diagram (a) and negative externalities in diagram (a) .
C) negative externalities in both diagrams.
D) positive externalities in both diagrams.