Refer to the above supply and demand graph. Point A represents the current equilibrium level of output of this product and point B represents the optimal level of output from society's perspective. If government decides to correct this externality with a subsidy to consumers, then the:
A. demand curve will shift from D2 to D1.
B. demand curve will shift from D1 to D2.
C. supply curve will shift from S1 to S2.
D. supply curve will shift from S2 to S1.
Answer: B
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