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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Graphically portray the following:

  1. a. A negative externality
  2. b. A positive externality

(a)

To determine

Graphical illustration of negative externality.

Explanation

Figure 1 shows the negative externality as follows:

In Figure 1, the vertical axis measures the price and cost. The horizontal axis measures the quantity. The upward sloping curve “S” (S=MPC)   is the market supply curve. The downward sloping curve “D” is the market demand curve (MPB+MSB)  

(b)

To determine

Graphical illustration of positive externality.

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