-In the above figure,market equilibrium at point E yields the quantity X.The quantity $X ^ { * }$ is the socially optimal quantity.Point E indicates that currently there is
A)a negative externality.
B)a positive externality.
C)a public good.
D)a positive externality with subsidy.

Question

-In the above figure,market equilibrium at point E yields the quantity X.The quantity $X ^ { * }$ is the socially optimal quantity.Point E indicates that currently there is
A)a negative externality. 
B)a positive externality. 
C)a public good. 
D)a positive externality with subsidy.

Quizplus · Accepted Answer

The market equilibrium at point E yields a quantity X that is greater than the socially optimal quantity $X ^ { * }$, indicating overproduction, which is characteristic of a negative externality.

-In the Above Figure,market Equilibrium at Point E Yields the Quantity