Use the following supply and demand graph to answer the question below.
S1 and D1 represent the current market supply and demand, respectively. S2 and D2 represent the socially optimal supply and demand. The positions of the graphs indicate that there is (are) external
A. benefits from production and external costs from consumption of the product.
B. costs from production and external benefits from consumption of the product.
C. costs from production and consumption of the product.
D. benefits from production and consumption of the product.
Answer: D
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