Consider the following graph of the market for chemical solvents, production of which damages a lake used for recreation. MSC $ MPC V MSB = MPB K Q of chemical solvents At the socially efficient quantity, total external costs are: Ox+ Y + Z OY+ Z Ov+X W + Y V + W + X + Y + Z X OY %24

Consider the following graph of the market for chemical solvents, production of which damages a lake used for recreation. MSC $ MPC V MSB = MPB K Q of chemical solvents At the socially efficient quantity, total external costs are: Ox+ Y + Z OY+ Z Ov+X W + Y V + W + X + Y + Z X OY %24

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 2.5P

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Question

Consider the following graph of the market for chemical solvents, production of
which damages a lake used for recreation.
MSC
$
MPC
V
MSB = MPB
K
Q of chemical solvents
At the socially efficient quantity, total external costs are:
Ox+ Y + Z
OY+ Z
Ov+X
W + Y
V + W + X + Y + Z
X
Y
%24

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