The provided figure shows the deadweight loss associated with negative externalities (ABD). Using this figure show the deadweight losses associated with positive externalities. Briefly explain.NOTE: take line "price" as the marginal benefit curve 900800Marginal social cost700D600DWLMarginalprivate cost500Net social gain400B Loss of profitPrice300200100Pareto-efficientquantity0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000Quantity of bananas, Q (tonnes per year)Costs ($)

The positive externality would result in the affecting the production of one party by another third…

Answered: The provided figure shows the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The provided figure shows the deadweight loss associated with negative externalities (ABD). Using this figure show the deadweight losses associated with positive externalities. Briefly explain.

NOTE: take line "price" as the marginal benefit curve

900
800
Marginal social cost
700
D
600
DWL
Marginal
private cost
500
Net social gain
400
B Loss of profit
Price
300
200
100
Pareto-efficient
quantity
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000
Quantity of bananas, Q (tonnes per year)
Costs ($)

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