Microeconomics
5th Edition
ISBN: 9781319098780
Author: Paul Krugman, Robin Wells
Publisher: Worth Publishers
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Question
Chapter 2, Problem 3UM
To determine
To Explain:
Whether toll should be increased keeping in mind that it reduces traffic and air pollution but causes financial hardship for frequent commuters.
Concept Introduction:
Marginal
Marginal Social Cost: It is the sum of marginal cost or marginal private cost and the marginal external cost, which is defined as the increase in cost imposed externally when a firm increases its output by one unit.
Marginal Social Benefit:
It is the sum of marginal private benefit and marginal external benefit, which is defined as an increased benefit that accrues to other parties when a firm increases its output by one unit.
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What are the answers for parts a and b? Thanks
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