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Scenario: the Production of a Good Creates a Negative Externality

Question 214

Multiple Choice

Scenario: The production of a good creates a negative externality. The following figure shows the market for this good.
Scenario: The production of a good creates a negative externality. The following figure shows the market for this good. -Refer to the scenario above.The socially optimal level of output for this good is ________,while the market produces ________. A) Q₁; Q₂ B) Q₁; Q₃ C) Q₂; Q3 D) Q₂; Q₁
-Refer to the scenario above.The socially optimal level of output for this good is ________,while the market produces ________.


A) Q₁; Q₂
B) Q₁; Q₃
C) Q₂; Q3
D) Q₂; Q₁

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