-Refer to the above figure. An external benefit exists. The amount of that benefit is represented by
A) P4.
B) the vertical distance between D1 and D2.
C) the distance between G and F.
D) P3.

Question

-Refer to the above figure. An external benefit exists. The amount of that benefit is represented by
A) P4. 
B) the vertical distance between D1 and D2. 
C) the distance between G and F. 
D) P3.

Quizplus · Accepted Answer

The external benefit in a market is represented by the vertical distance between the demand curve that accounts for the external benefits (D2) and the original demand curve without those benefits (D1). This distance illustrates the additional value or benefit that is not captured in the market price.

-Refer to the Above Figure