Given the position of the MSC curve, once can conclude that the PRICE OF GOOD X P₂ P₁ - H Q₁ Q₂ Q₂ Marginal Social Cost Marginal Private Cost Marginal Social Benefit QUANTITY OF GOOD X O production of Good X occurs in an imperfectly competitive market O market quantity Q3 is the socially optimal quantity O production of Good X creates a negative externality O free market will produce too little of Good X private costs of producing Good X exceed the social cost of production at all levels of output

Given the position of the MSC curve, once can conclude that the PRICE OF GOOD X P₂ P₁ - H Q₁ Q₂ Q₂ Marginal Social Cost Marginal Private Cost Marginal Social Benefit QUANTITY OF GOOD X O production of Good X occurs in an imperfectly competitive market O market quantity Q3 is the socially optimal quantity O production of Good X creates a negative externality O free market will produce too little of Good X private costs of producing Good X exceed the social cost of production at all levels of output

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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