Refer to the below competitive market diagram for product Z.Assume that the current market demand and supply curves for Z are D₂ and S₂.If there are substantial positive externalities associated with the production of Z, it can be argued that: A)efficient resource allocation occurs at output G and price B because the market mechanism does not measure all benefits. B)an output smaller than G would improve resource allocation. C)government should levy a per unit excise tax on Z to shift the demand curve toward D₁. D)an output greater than G would result in a more efficient allocation of resources.

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The Answer of Refer to the below competitive market diagram for product Z.Assume that the current market demand and supply curves for Z are D₂ and S₂.If there are substantial positive externalities associated with the production of Z, it can be argued that: A)efficient resource allocation occurs at output G and price B because the market mechanism does not measure all benefits. B)an output smaller than G would improve resource allocation. C)government should levy a per unit excise tax on Z to shift the demand curve toward D₁. D)an output greater than G would result in a more efficient allocation of resources.

Refer to the Below Competitive Market Diagram for Product Z