Consider the graph which represents a local power plant.The production process includes the dumping of waste in the local river.The level of output Q_Private A)represents an efficient allocation of resources for the production of electricity. B)represents an overallocation of resources for the production of electricity. C)represents an underallocation of resources for the production of electricity. D)represents a cost-effective allocation of resources for the production of electricity.

Question

Quizplus · Accepted Answer

The graph shows the production of electricity at point U1B1, which is beyond the efficient level of output. This means that the power plant is using more resources than necessary to produce electricity, leading to inefficiency. Additionally, the graph does not take into account the negative externalities caused by the dumping of waste in the local river, which further supports the conclusion that resources are being overallocated.

Consider the Graph Which Represents a Local Power Plant