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 A B D 0 MEC 0 of barrels) QE Q (thousands Μπ 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 D

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 A B D 0 MEC 0 of barrels) QE Q (thousands Μπ 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 D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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