Refer to the supply and demand graph below. In the graph, line S is the current supply of this product, while line S1 is the optimal supply from the society's perspective. This figure suggests that there is (are):





A. External benefits from the production of this product

B. External costs in the production of this product

C. Currently an underallocation of resources toward producing this good

D. Positive externalities from producing the good

B. External costs in the production of this product

Economics

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A consultant interviews the hiring manager of a small, profit-maximizing firm. The manager explains that the firm used to have 15 employees, but the most-recently-hired employee has just left the company. The firm is currently advertising to hire a worker to replace the employee who just left at the same wage rate. We can infer that

a. for the 15th employee, the wage exceeded the value of the marginal product of labor. b. for the 15th employee, the value of the marginal product of labor exceeded the wage. c. the firm is too large and should remain at 14 employees. d. the firm is no longer attempting to maximize profits.

Economics

Explain how a firm in a competitive market identifies the profit-maximizing level of production. When should the firm raise production, and when should the firm lower production?

Economics