Price SSoc Slnt DInt

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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All jurisdictions in the United States have laws against drunk driving, with penalties ranging from lost driving privileges to jail time. But in many jurisdictions, establishments can also be held liable for selling alcohol to visibly intoxicated patrons who then cause accidents. In those locales, having drunk drivers on the road is a negative externality that both consumers and producers must internalize.

The effect on the supply and demand curves for alcoholic beverages is to shift both curves to the left: as drinkers moderate their intake, demand drops from DInternal to DSocial, and as bars and liquor stores refuse service to drunk patrons, supply drops from SInternal to SSocial. Which point on the graph represents the social optimum in this situation? Mark your answer using the point tool.

Price
SSoc
Slnt
DInt
Dsoc
Transcribed Image Text:Price SSoc Slnt DInt Dsoc
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