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The quantity that a market produces tends to be different from the outcome that is in society's best interests. Which part of the graph represents
The quantity that a market produces tends to be different from the outcome that is in society's best interests. Which part of the graph represents this difference, and does this lead to underproduction or overproduction? A marginal private benefit (demand) line and a marginal social cost (supply) line are drawn on a horizontal axis representing quantity (flu shots per year) and a vertical axis representing price of flu shots. They intersect at point (A). Another demand line representing marginal social benefit is drawn above marginal private benefit with an upward arrow (D) between them, marked external benefit. Marginal social benefit intersects marginal social cost at point (C). (B) is the difference in quantity between points (A) and point (C). D, overproduction D, underproduction B, underproduction B, overproduction
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