The graph below shows a market with a certain externality. S denotes the private cost of producers and D denotes the private value of consumers in this market. Without any intervention the total surplus is equal to P H S+ External Cost E S S C 0 (KGO) (KIE) O (KGO) - (IJG) O (KIE) - (JIG) D Q

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter5: Difficult Cases For The Market And The Role Of Government
Section: Chapter Questions
Problem 5CQ
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The graph below shows a market with a certain externality. S denotes the private cost of producers and D denotes the private value of
consumers in this market. Without any intervention the total surplus is equal to
P
H
S+ External Cost
E
S
S
C
0
(KGO)
(KIE)
O (KGO) - (IJG)
O (KIE) - (JIG)
D
Q
Transcribed Image Text:The graph below shows a market with a certain externality. S denotes the private cost of producers and D denotes the private value of consumers in this market. Without any intervention the total surplus is equal to P H S+ External Cost E S S C 0 (KGO) (KIE) O (KGO) - (IJG) O (KIE) - (JIG) D Q
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