Figure 5-2 Figure 5-2 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 5-2.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 5-2

Figure 5-2 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 5-2.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 5-2 Figure 5-2 Shows a Market with an Externality.The