Answered: Using the above graph of a market with…

Using the above graph of a market with a positive externality, the amount of the subsidy necessary to correct the positive externality is A P1 - P3. B D P1 - P2. P2 - P3. P2 - P4.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Using the above graph of a market with a positive externality, the amount of the subsidy necessary to correct
the positive externality is
A P1 - P3.
B
P1 - P2.
P2 - P3.
P2 - P4.

P
P1
P2
P3
P4
E
F
G
H
Q2 Q1
MC
MBS
MBP
Q

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