The use of cars in many cities gives rise to negative externalities. The diagram illustrates the free market equilibrium $X_1$ and the socially efficient market equilibrium $X_2$. Using the diagram, which statement is correct?
- ASocially efficient supply is $S$ and the market price $P$ is too high.
- BSocially efficient supply is $S$ and the market price $P$ is too low.
- CSocially efficient supply is $S_1$ and the market price $P$ is too high.
- DSocially efficient supply is $S_1$ and the market price $P$ is too low.