The following graph shows the demand (marginal private benefits) and supply (marginal private costs) curves for a good. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Suppose that a positive externality arises as a result of the production of this good. Adjust the following graph by shifting one of the curves to reflect the presence of the positive externality. PRICE AND COST The market fails in that it I overproduces underproduces Supply Demand the good. ¦ } Demand Supply
The following graph shows the demand (marginal private benefits) and supply (marginal private costs) curves for a good. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. Suppose that a positive externality arises as a result of the production of this good. Adjust the following graph by shifting one of the curves to reflect the presence of the positive externality. PRICE AND COST The market fails in that it I overproduces underproduces Supply Demand the good. ¦ } Demand Supply
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter12: Environmental Protection And Negative Externalities
Section: Chapter Questions
Problem 42P: Table 12.12, shows the supply and demand conditions for a firm that will play trumpets on the...
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