FIGURE 6-3

-Refer to Figure 6-3. What area (bounded by letters) represents the associated efficiency loss resulting when there are external benefits associated with education?

Question

FIGURE 6-3
 
-Refer to Figure 6-3. What area (bounded by letters) represents the associated efficiency loss resulting when there are external benefits associated with education?

Quizplus · Accepted Answer

The area represented by a, b, c in such diagrams typically illustrates the efficiency loss or deadweight loss due to the underproduction or underconsumption of a good with positive externalities, like education. This area shows the social benefits that are not realized when the market produces less than the socially optimal quantity.

FIGURE 6-3 -Refer to Figure 6-3. What Area (Bounded by Letters) Represents