Question

Figure 10-12 Price Supply External benefit Line 2 Line 1 ei 22 Quantity Refer to Figure 10-12. An alternative label for the quantity , would be O EXTERNAL O MARKET O OPTIMUM O PRIVATE

Answer 1

Option C (Q_{​​​optimum} )

Explanation-

When a positive externality is present, the market produces less than the socially optimal quantity of the good, since a benefit to society that is not captured by the individual. Individual only care about marginal private benefit and marginal private cost.

Q_{​​​​​​2}​​​ Is alternative lable for Q optimum.

Q​​​​​_{​​​​​​optimum} > Q_{​​​​​​market}