The Following Questions Refer to the graph below.
-If external benefits are associated with the consumption of the good,consumers could be induced to purchase the efficient quantity if the price were set at

Question

The Following Questions Refer to the graph below. 
-If external benefits are associated with the consumption of the good,consumers could be induced to purchase the efficient quantity if the price were set at

Quizplus · Accepted Answer

When external benefits are present, the social benefit curve (SB) lies above the private benefit curve (PB). The socially efficient quantity is where SB intersects with the demand curve (D). In this case, it is at point U1. Thus, in order to induce consumers to purchase the efficient quantity, the price should be set at the intersection of SB and D at point B10. This is represented by choice C, P₀.

The Following Questions Refer to the Graph Below