Refer to the Diagram of the Market for Product X

Multiple Choice

Refer to the diagram of the market for product X. Curve St embodies all costs (including externalities) , and Dt embodies all benefits (including externalities) associated with the production
And consumption of X. Assuming the market equilibrium output is Q1, we can conclude that the
Existence of external

A) costs has resulted in an overallocation of resources to X.
B) benefits has resulted in an overallocation of resources to X.
C) costs has resulted in an underallocation of resources to X.
D) benefits has resulted in an underallocation of resources to X.