Figure 10-5

-Refer to Figure 10-5.Which of the following statements is correct?
A)The marginal benefit of the positive externality is measured by P₃ - P₁.
B)The marginal cost of the negative externality is measured by P₃ - P₂.
C)The marginal cost of the negative externality is measured by P₃ - P₁.
D)The marginal cost of the negative externality is measured by P₃ - P₀.

Question

Figure 10-5
 
-Refer to Figure 10-5.Which of the following statements is correct?
A)The marginal benefit of the positive externality is measured by P₃ - P₁. 
B)The marginal cost of the negative externality is measured by P₃ - P₂. 
C)The marginal cost of the negative externality is measured by P₃ - P₁. 
D)The marginal cost of the negative externality is measured by P₃ - P₀.

Quizplus · Accepted Answer

The marginal cost of the negative externality is the difference between the social cost and the private cost, which is measured by P₃ - P₁.

Figure 10-5 -Refer to Figure 10-5.Which of the Following Statements Is Correct