Economics (AS & A Level) · Oct / Nov 2025 · Paper 34 · Question 4
9708Private costs and benefits, externalities and social costs and benefits
The diagram shows positive and negative externalities of production and consumption. Which row shows the correct combination of production and consumption externality when economic welfare is maximised?
- Aposition of economic welfare X; production externality negative; consumption externality negative
- Bposition of economic welfare Y; production externality positive; consumption externality negative
- Cposition of economic welfare X; production externality negative; consumption externality positive
- Dposition of economic welfare Y; production externality positive; consumption externality positive
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Correct answer: B. position of economic welfare Y; production externality positive; consumption externality negative
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