Refer to the diagram of the market for product X. Curve St embodies all costs (including externalities), and Dt embodies all beneﬁts (including externalities) associated with the production
And consumption of X. Assuming the equilibrium output is Q2, we can conclude that the existence
Of external
A) costs has resulted in an overallocation of resources to X.
B) beneﬁts has resulted in an overallocation of resources to X.
C) costs has resulted in an underallocation of resources to X.
D) beneﬁts has resulted in an underallocation of resources to X.

Question

Refer to the diagram of the market for product X. Curve St embodies all costs (including externalities), and Dt embodies all beneﬁts (including externalities) associated with the production
And consumption of X. Assuming the equilibrium output is Q2, we can conclude that the existence
Of external
A) costs has resulted in an overallocation of resources to X. 
B) beneﬁts has resulted in an overallocation of resources to X. 
C) costs has resulted in an underallocation of resources to X. 
D) beneﬁts has resulted in an underallocation of resources to X.

Quizplus · Accepted Answer

The Answer of  Refer to the diagram of the market for product X. Curve St embodies all costs (including externalities), and Dt embodies all beneﬁts (including externalities) associated with the production
And consumption of X. Assuming the equilibrium output is Q2, we can conclude that the existence
Of external
A) costs has resulted in an overallocation of resources to X. 
B) beneﬁts has resulted in an overallocation of resources to X. 
C) costs has resulted in an underallocation of resources to X. 
D) beneﬁts has resulted in an underallocation of resources to X.

Refer to the Diagram of the Market for Product X