Refer to Figure 16- 1. Suppose that the perfectly competitive market with no government intervention achieves equilibrium at point A. If the social marginal costs and social marginal benefits are represented by MC0 and MB0, respectively, then

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At point A, the market achieves the equilibrium of price P0 and quantity Q0, where the marginal cost (MC) equals the marginal benefit (MB). However, if the social costs and benefits are taken into account, the equilibrium should occur at the point where the social marginal cost (MC0) equals the social marginal benefit (MB0), which is also known as the allocatively efficient point. Since point A indicates that the market price and quantity are consistent with allocative efficiency, the answer is D.