-Refer to Figure 15-5. If, because of an externality, the economically efficient output is Q₂ and not the current equilibrium output of Q₁, what does D₁ represent? A) the demand curve reflecting external benefits B) the demand curve reflecting social benefits C) the demand curve reflecting private benefits D) the demand curve reflecting the sum of private and social benefits

Question

Quizplus · Accepted Answer

D₁ represents the demand curve reflecting private benefits, as it is the current equilibrium output without accounting for externalities.