-Refer to the above graph to answer this question.If buyers of this product were subsidized by an amount equal to the external benefits,what would be the equilibrium values of price and quantity?
A)$80 and 40.
B)$100 and 30.
C)$100 and 80.
D)$120 and 70.
E)$120 and 80.

Question

-Refer to the above graph to answer this question.If buyers of this product were subsidized by an amount equal to the external benefits,what would be the equilibrium values of price and quantity?
A)$80 and 40. 
B)$100 and 30. 
C)$100 and 80. 
D)$120 and 70. 
E)$120 and 80.

Quizplus · Accepted Answer

Subsidizing buyers by the amount of external benefits effectively shifts the demand curve to the right, aligning it with the social benefit curve. This results in a new equilibrium where the quantity is maximized at the socially optimal point, which corresponds to a price of $100 and a quantity of 80.

-Refer to the Above Graph to Answer This Question