Figure 10-4

-Refer to Figure 10-4.If all external costs were internalized,then the market's equilibrium output would be
A)Q₁.
B)Q₂.
C)Q₃.
D)Q₄.

Question

Figure 10-4
 
-Refer to Figure 10-4.If all external costs were internalized,then the market's equilibrium output would be
A)Q₁. 
B)Q₂. 
C)Q₃. 
D)Q₄.

Quizplus · Accepted Answer

When external costs are internalized, the market equilibrium output is reduced to the socially optimal level, which is typically less than the market equilibrium without internalizing external costs. In this context, Q₂ represents the output level where the social cost equals the social benefit, indicating the internalization of external costs.

Figure 10-4 -Refer to Figure 10-4.If All External Costs Were Internalized,then the Costs