In the Figure Given Below,the Competitive Supply Curve of a Commodity

In the figure given below,the competitive supply curve of a commodity is given by S₁,the private marginal benefit curve is D₁,the marginal social benefit curve is D₂,and the MB_E curve reflects the marginal external benefits.
-Refer to Figure 20-2.If the government provides a subsidy of $8 per unit of output,then the:

A) marginal social benefit will exceed the marginal social cost and the good will be underproduced.
B) marginal social cost will exceed the marginal social benefit and the good will be underproduced.
C) marginal social benefit will exceed the marginal social cost and the good will be overproduced.
D) marginal social cost will exceed the marginal social benefit and the good will be overproduced.

Correct Answer:

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