-Refer to the above figure.The market equilibrium quantity is $\mathrm { Q } _ { 1 }$ .Point $\mathrm { Q } _ { 2 }$
Represents the optimal amount of production.This indicates that there is
A)a public good which should be produced.
B)regressive taxation of the product.
C)a positive externality.
D)a negative externality.

Question

-Refer to the above figure.The market equilibrium quantity is $\mathrm { Q } _ { 1 }$ .Point $\mathrm { Q } _ { 2 }$
Represents the optimal amount of production.This indicates that there is
A)a public good which should be produced. 
B)regressive taxation of the product. 
C)a positive externality. 
D)a negative externality.

Quizplus · Accepted Answer

The optimal amount of production being greater than the market equilibrium quantity suggests a positive externality, where the social benefit exceeds the private benefit, leading to underproduction in the market.

-Refer to the Above Figure Q1\mathrm { Q } _ { 1 }Q1​

-Refer to the Above Figure $\mathrm { Q } _ { 1 }$