The diagram shows the private and social costs and benefits of production in a free market that result in market failure. costs, benefits MSC KL M N MPB MPC MSB output Which change in output would be necessary to overcome this market failure? A from K to M B from M to N C from M to L D from N to L

Principles of Economics 2e
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ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter13: Positive Externalities And Public Goods
Section: Chapter Questions
Problem 24P: Assume that the marginal private costs of a film producing fuel-efficient can; is greater than the...
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Why is option B correct?

The diagram shows the private and social costs and benefits of production in a free market that
result in market failure.
costs,
benefits
O
MSC
KL M
N
MPB
MPC
MSB
output
Which change in output would be necessary to overcome this market failure?
A from K to M
B from M to N
C from M to L
D
from N to L
Transcribed Image Text:The diagram shows the private and social costs and benefits of production in a free market that result in market failure. costs, benefits O MSC KL M N MPB MPC MSB output Which change in output would be necessary to overcome this market failure? A from K to M B from M to N C from M to L D from N to L
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