Multiple Choice
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. An external cost exists. This will lead to a(n)
A) underproduction equal to Q₁ minus Q₂.
B) overproduction equal to Q₄ minus Q₃.
C) underproduction equal to Q₄ minus Q₃.
D) overproduction equal to Q₁ minus Q₂.
Correct Answer:
Verified
Correct Answer:
Verified
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