Question 1 (4 points) The figure below shows a market with an externality. Price 52 P2 P1 Demand Q2 Q1 Quantity If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does S, represent? O the market supply curve reflecting marginal social cost O the market supply curve reflecting implicit cost O the market supply curve reflecting marginal private cost the market supply curve reflecting external costQuestion 2 (4 points) The table below lists the marginal cost of cowboy hats by a firm that specializes in producing western wear. The Firm's Cowboy Hats Marginal Cost (dollars) Ist hat $24 2nd hat 30 3rd hat 38 4th hat 46 If the market price of the cowboy hats is $40, The firm will produce four hats. there will be a surplus; as a result, the price will fall to $24. O producer surplus will equal $28. producer surplus from the first hat is $40.Question 3 {4 points) The figure below shows the market for meats. The market is initially in equilibrium. Suppose producers decide to cut output to 40 pounds in order to raise the price to $18. g m an Quantity {pounds} At a price of $18 consumers are willing to buy 40 pounds of meats. Is this an economicallyr efficient quantity? (3. Yes, otherwise consumers would not buy 40 units. If} No, the marginal cost of the 40th unit exceeds the marginal benefit of the 40th \\_./' unit. (W, No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th \\_/ _ unit. 0. Yes, because $18 shows what consumers are willing to pay for the product