Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $490 per unit. PRICE (Dollars per unit of electric cars) 1400 1260 1120 980 840 700 560 420 280 140 0 O 0 O Supply (Private Cost) Demand (Private Value) Social Cost
Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $490 per unit. PRICE (Dollars per unit of electric cars) 1400 1260 1120 980 840 700 560 420 280 140 0 O 0 O Supply (Private Cost) Demand (Private Value) Social Cost
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Externality:
Externality refers to the situation of a person engaging in activities that may influence the well-being of bystanders without any compensation payments or receipts.
When this impact benefits the bystander, it is called a positive externality and when this impact is negative to the bystander, it is called a negative externality. The negative externality is a social cost to society.
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