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This is a graph reprinted from Section 12.1 the Economics of Pollution. Please explain the graph with particular attention paid to why there are two supply curves. How can a government use this graph to establish pollution controls?

This is a graph reprinted from Section 12.1 the Economics of Pollution. Please explain the graph with particular attention paid to why there are two supply curves. How can a government use this graph to establish pollution controls?

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter13: Positive Externalities And Public Goods
Section: Chapter Questions
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This is a graph reprinted from Section 12.1 the Economics of Pollution. Please explain the graph with particular attention paid to why there are two supply curves. How can a government use this graph to establish pollution controls?

278 Price Quantity Demanded Price ($) $600 50,000 950 900 850 800- 750- 700 650 600- 550- (40,000,700) E 30,000 50,000 70,000 Refrigerators Figure 12.2 Taking Social Costs into Account: A Supply Shift If the firm takes only its own costs of production into account, then its supply curve will be Sprivate, and the market equilibrium will occur at Eo. Accounting for additional external costs of $100 for every unit produced, the firm's supply curve will be Ssocial. The new equilibrium will occur at E₁. 40,000 10,000 Quantity Supplied before. Considering Pollution Cost Chapter 12 | Environmental Protection and Negative Externalities S social private E. (45,000,650) D Quantity Supplied after Considering Pollution Cost 30,000
Transcribed Image Text:278 Price Quantity Demanded Price ($) $600 50,000 950 900 850 800- 750- 700 650 600- 550- (40,000,700) E 30,000 50,000 70,000 Refrigerators Figure 12.2 Taking Social Costs into Account: A Supply Shift If the firm takes only its own costs of production into account, then its supply curve will be Sprivate, and the market equilibrium will occur at Eo. Accounting for additional external costs of $100 for every unit produced, the firm's supply curve will be Ssocial. The new equilibrium will occur at E₁. 40,000 10,000 Quantity Supplied before. Considering Pollution Cost Chapter 12 | Environmental Protection and Negative Externalities S social private E. (45,000,650) D Quantity Supplied after Considering Pollution Cost 30,000
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