The graph blow represents a negative externality in the market for oil. What is the per...

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The graph blow represents a negative externality in the market for oil. What is the per unit value of the externality?

P S So PA PB PC D ад ав Q

A. Pa-Pc

B. Pb-Pc

C. Pa

D. Pb

E. Pa-Pb

business economics

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Answer 1

Answer #1

Ans. B) Pb - Pc

S1 represents the social cost of the economy and S0 represents the private cost of the economy. Thus, the difference between the prices at these costs give us the per unit value of the negative externality which in our case is Pb - Pc.

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Answer 2

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