Use the following diagram to answer the following questions.

-Refer to Diagram 4-3. In the above diagram, if the external costs are internalized (accounted for), the efficient price and quantity will be

Question

Use the following diagram to answer the following questions.
 
-Refer to Diagram 4-3. In the above diagram, if the external costs are internalized (accounted for), the efficient price and quantity will be

Quizplus · Accepted Answer

When external costs are internalized, the supply curve shifts to reflect the true social cost, leading to a higher price (P₂) and a lower quantity (Q₂) to achieve efficiency.

Use the Following Diagram to Answer the Following Questions