et Refer to the dagram which shows a market with a positive externality. The mar

Question

et Refer to the dagram which shows a market with a positive externality. The market ot equilibrium output level is Quantity effid es co Click to select your answer ore nom dit) r the price of a product that the market is supplying is equal to the margnal value consumers place on it, and equals marginal cost. In than the marginal cost of producing it urces must be alocated to various Industries in just the nght amounts, otherwise too much or too ittle output gets nue. This is the case for the long-run equilibrium of perfect competion roduced " When drawing dliagrams at the iuwest nossible average total cost. when drawing diagrams for hrms, this condition is satisfed if the equlibrium is at the minimu

Explanation / Answer

If it is let to market to adjust the equilibrium then we will consider Social Marginal benefit curve hence the interaction between Marginal Cost and Social Marginal Benefit curve would give Equilibrium Quantity and Price

If we had considered Private Beneft curve then we would have faced dead weight loss

therefore our answer is Qn ( Option A is correct)

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