This graph is for a firm that pollutes as a result of its manufacturing processes.
Supply curve S_P represents the manufacturer's supply curve when only its private costs are considered. If pollution costs equal to ef are generated for every unit produced, the true marginal cost to society, including pollution costs, of producing the product is equal to supply curve S_S. Explain why Q₁ is better for society than Q_e. Include information regarding consumer/producer surplus in your response.

Question

This graph is for a firm that pollutes as a result of its manufacturing processes.

Supply curve S_P represents the manufacturer's supply curve when only its private costs are considered. If pollution costs equal to ef are generated for every unit produced, the true marginal cost to society, including pollution costs, of producing the product is equal to supply curve S_S. Explain why Q₁ is better for society than Q_e. Include information regarding consumer/producer surplus in your response.

Quizplus · Accepted Answer

The Answer of This graph is for a firm that pollutes as a result of its manufacturing processes. Supply curve S_P represents the manufacturer's supply curve when only its private costs are considered. If pollution costs equal to ef are generated for every unit produced, the true marginal cost to society, including pollution costs, of producing the product is equal to supply curve S_S. Explain why Q₁ is better for society than Q_e. Include information regarding consumer/producer surplus in your response.

This Graph Is for a Firm That Pollutes as a Result