Figure 11.7 Figure 11.7 shows a market with an externality. The current market equilibrium output of Q₁ is not the economically efficient output. The economically efficient output is Q₂.
-Refer to Figure 11.7.Suppose the current market equilibrium output of Q₁ is not the economically efficient output because of an externality.The economically efficient output is Q₂.In that case,diagram shows

Question

Figure 11.7

Figure 11.7 shows a market with an externality. The current market equilibrium output of Q₁ is not the economically efficient output. The economically efficient output is Q₂.
-Refer to Figure 11.7.Suppose the current market equilibrium output of Q₁ is not the economically efficient output because of an externality.The economically efficient output is Q₂.In that case,diagram shows

Quizplus · Accepted Answer

The economically efficient output being greater than the current market equilibrium output suggests a positive externality, where the social benefit exceeds the private benefit, leading to underconsumption at the market equilibrium.

Figure 117 Figure 11