Refer to Figure 5-1. If, because of an externality, the ...

[kshipps]

Refer to Figure 5-1. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does S2 represent?
 
  A) the market supply curve reflecting marginal social cost
  B) the market supply curve reflecting implicit cost
  C) the market supply curve reflecting marginal private cost
  D) the market supply curve reflecting external cost

Question 2

Refer to Table 8-27. What is the level of disposable personal income for this economy?
 
  A) 1,080 billion B) 1,010 billion C) 980 billion D) 860 billion

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Answer to Question 1

A

Answer to Question 2

C