
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:Consider a graph of the market for electricity, where S₁ represents the upward-sloping marginal private cost of production and D₁ represents
the downward-sloping marginal private benefit of consumption.
Suppose the production of electricity generates a negative externality.
With the externality, the marginal social cost curve will be
the marginal private benefit curve.
be
the marginal private cost curve but the marginal social benefit curve will
Compared with the socially efficient quantity for society, the private market produces
electricity.
DE
tt:
D
re
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