Following graph is of the refined petroleum market we have considered in class (MEC is the marginal external cost to recreational users; Mл is the marginal profit of the refinery). $ per barrel MEC A D B C 0 QE QC Q (thousands Μπ of barrels) Identify the economic interpretations of each of the labeled areas, A, B, C, and D, by matching each labeled area to one of the following four options: (i) Total amount of environmental damage associated with producing the efficient output level; (ii) (iii) (iv) The net gain accruing to recreational users by getting the refineries to reduce output from the competitive level to the efficient level; Loss of profit for petroleum refiners from reducing output from the competitive to the efficient level; Net gain accruing to petroleum refineries of producing at the efficient level. A B _ C Ꭰ
Following graph is of the refined petroleum market we have considered in class (MEC is the marginal external cost to recreational users; Mл is the marginal profit of the refinery). $ per barrel MEC A D B C 0 QE QC Q (thousands Μπ of barrels) Identify the economic interpretations of each of the labeled areas, A, B, C, and D, by matching each labeled area to one of the following four options: (i) Total amount of environmental damage associated with producing the efficient output level; (ii) (iii) (iv) The net gain accruing to recreational users by getting the refineries to reduce output from the competitive level to the efficient level; Loss of profit for petroleum refiners from reducing output from the competitive to the efficient level; Net gain accruing to petroleum refineries of producing at the efficient level. A B _ C Ꭰ
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Hand written solutions are strictly prohibited
![Following graph is of the refined petroleum market we have considered in class (MEC
is the marginal external cost to recreational users; Mл is the marginal profit of the
refinery).
$ per barrel
MEC
A
D
B
C
0
QE
QC
Q (thousands
Μπ
of barrels)
Identify the economic interpretations of each of the labeled areas, A, B, C, and D, by
matching each labeled area to one of the following four options:
(i) Total amount of environmental damage associated with producing the
efficient output level;
(ii)
(iii)
(iv)
The net gain accruing to recreational users by getting the refineries to
reduce output from the competitive level to the efficient level;
Loss of profit for petroleum refiners from reducing output from the
competitive to the efficient level;
Net gain accruing to petroleum refineries of producing at the efficient
level.
A
B _
C
Ꭰ](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F850f0407-4cf9-4db2-aead-c63d5b5cea6e%2F4bfc24ae-43dc-449f-b0e6-9f8de92f9d53%2Foqag7u_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Following graph is of the refined petroleum market we have considered in class (MEC
is the marginal external cost to recreational users; Mл is the marginal profit of the
refinery).
$ per barrel
MEC
A
D
B
C
0
QE
QC
Q (thousands
Μπ
of barrels)
Identify the economic interpretations of each of the labeled areas, A, B, C, and D, by
matching each labeled area to one of the following four options:
(i) Total amount of environmental damage associated with producing the
efficient output level;
(ii)
(iii)
(iv)
The net gain accruing to recreational users by getting the refineries to
reduce output from the competitive level to the efficient level;
Loss of profit for petroleum refiners from reducing output from the
competitive to the efficient level;
Net gain accruing to petroleum refineries of producing at the efficient
level.
A
B _
C
Ꭰ
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