Refer to the diagram, in which S is the market supply curve and S is a supply curve comprising all costs of production, including external costs. Assume that the number of people affected by these external costs is large. Without government interference, this market will reach Select one: O A. an overallocation of resources to this product. O B. an optimal allocation of society's resources. O C. an underallocation of resources to this product. O D. a higher price than is consistent with an optimal allocation of resources.

Refer to the diagram, in which S is the market supply curve and S is a supply curve comprising all costs of production, including external costs. Assume that the number of people affected by these external costs is large. Without government interference, this market will reach Select one: O A. an overallocation of resources to this product. O B. an optimal allocation of society's resources. O C. an underallocation of resources to this product. O D. a higher price than is consistent with an optimal allocation of resources.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 3PA: Greater consumption of alcohol leads to more motor vehicle accidents and, thus, imposes costs on...

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