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A Shift from S1 to S2 Reflects the Change That

Question 42

Multiple Choice

A shift from S<sub>1</sub> to S<sub>2</sub> reflects the change that happens when a negative externality is taken into account. A shift from D<sub>1</sub> to D<sub>2</sub> reflects the change that happens when a positive externality is taken into account. -Refer to the above figures. Which of the panels would be consistent with the situation in which external benefits exist? A) Panel 1 B) Panel 2 C) Panels 1 and 2 D) Neither panels 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. Which of the panels would be consistent with the situation in which external benefits exist?


A) Panel 1
B) Panel 2
C) Panels 1 and 2
D) Neither panels

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