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jccruz jccruz
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A year ago

The figure below shows the marginal benefit to consumers, MB, the marginal cost to private firms, MCP, and the marginal cost to society, MCS, at each level of output of some good.

Short description: A graph represents the Quantity versus Price relationship. Long description: In the graph, the horizontal axis denotes Quantity and is marked with three values, in the increasing order: Q subscript 1 through 3. The vertical axis denotes Price and is marked with four values in the increasing order: P subscript 1 through 4. Two increasing lines are drawn: M C subscript S and M C subscript p. A decreasing line is drawn M B. The point of intersection of these lines is marked and shown. The point of intersection of the line M C subscript S and M B is (Q subscript 2, P subscript 3). The point of intersection of the line M C subscript p and M B is (Q subscript 3, P subscript 2). Other points marked on the lines, which are the projections of intersection point on either line are as follows. On the line M C subscript s: (Q subscript 1, P subscript 1) and (Q subscript 3, P subscript 4). On the line M C subscript p: (Q subscript 2, P subscript 1).

FIGURE 17-1

Refer to Figure 17-1. How is a negative externality depicted in this diagram?



▸ Marginal social cost is greater than the marginal private cost.

▸ Marginal social cost is greater than the marginal social benefit.

▸ Marginal social benefit to consumers is diminishing with greater output.

▸ Optimal level of output occurs where marginal private cost is positive.

▸ Optimal level of output occurs where marginal private benefit is positive.
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Microeconomics

Microeconomics


Edition: 17th
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twogat123twogat123
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jccruz Author
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Thanks for your help!!
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This site is awesome
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