Multiple Choice
A shift from S1 to S2 reflects the change that happens when a negative externality is taken into account. A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account.
-Refer to the above figures. Externalities exist in both panels. After correcting for the externalities the prices should be
A)
and
.
B)
and
.
C)
and
.
D)
and
.
Correct Answer:
Verified
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