Econ 4th Edition by William McEachern

تمرين 4

EXTERNAL COSTS WITH FIXED-PRODUCTION TECHNOLOGY Review the situation illustrated in Exhibit 1 in this chapter. If the government sets the price of electricity at the socially optimal level, why is the net gain equal to triangle abc , even though consumers now pay a higher price for electricity? What would the net gain be if the government set the price above the optimal level?