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Figure: Market for Bathroom Cleaner
-(Figure: Market for Bathroom Cleaner) Refer to the figure. The figure shows a market for cans of a bathroom cleaner that causes environmental damage, imposing costs on people other than the consumers and producers of the cleaner. What is the external cost of the bathroom cleaner?
A) $6
B) $9
C) $12
D) $3

Question

Use the following to answer questions:
Figure: Market for Bathroom Cleaner 
-(Figure: Market for Bathroom Cleaner) Refer to the figure. The figure shows a market for cans of a bathroom cleaner that causes environmental damage, imposing costs on people other than the consumers and producers of the cleaner. What is the external cost of the bathroom cleaner?
A) $6 
B) $9 
C) $12 
D) $3

Quizplus · Accepted Answer

The external cost is the difference between the social cost and the private cost. In the figure, this is represented by the vertical distance between the social cost curve and the private cost curve at the equilibrium quantity, which is $6.

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