Figure 4-10
-Refer to Figure 4-10.In the absence of any government intervention,the private market
A)under produces by Qo - Qm units.
B)over produces by Qo - Qm units.
C)over produces by Qn - Qm units.
D)under produces by Qn - Qm units.

Question

Figure 4-10 
-Refer to Figure 4-10.In the absence of any government intervention,the private market
A)under produces by Qo - Qm units. 
B)over produces by Qo - Qm units. 
C)over produces by Qn - Qm units. 
D)under produces by Qn - Qm units.

Quizplus · Accepted Answer

In the absence of government intervention, the private market underproduces by Qn - Qm units because it does not account for the positive externalities or benefits to society, leading to a lower quantity produced than the socially optimal level.

Figure 4-10 -Refer to Figure 4-10.In the Absence of Any Government Intervention,the