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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