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Figure 8.1 -In Figure 8.1, Market Equilibrium Occurs at X, but X^*

Question 22

Multiple Choice

Figure 8.1 -In Figure 8.1, market equilibrium occurs at X, but X<sup>*</sup> is the socially optimal quantity. This indicates that A) production of the good generates a negative externality. B) production of the good generates a positive externality. C) the good represented is a public good. D) the industry producing the good is a monopoly. Figure 8.1
-In Figure 8.1, market equilibrium occurs at X, but X^* is the socially optimal quantity.
This indicates that

A) production of the good generates a negative externality.
B) production of the good generates a positive externality.
C) the good represented is a public good.
D) the industry producing the good is a monopoly.

Correct Answer: