Exhibit 30-1 ​

Multiple Choice

Exhibit 30-1
​

-Refer to Exhibit 30-1. If the exhibit represents a negative externality situation, then what is Q₁?

A) It is the quantity of output at which marginal social costs (MSC) equal marginal private costs (MPC) .
B) It is the quantity of output at which MPC > MSC.
C) It is the market output; it is the quantity of output that exists if the external costs associated with the negative externality are not taken into account.
D) It is the socially optimal output; it is the quantity of output that exists if the external costs associated with the negative externality are taken into account.
E) none of the above