(Figure: MSC and Supply Curves) Use the graph to answer the question.
The graph shows the marginal social cost and supply curves in a market. What is the marginal external cost imposed on society?

Question

Quizplus · Accepted Answer

The Marginal External Cost (MEC) is the difference between the marginal social cost and the marginal private cost. At the quantity where the supply curve intersects with the marginal social cost curve, the marginal private cost is $8. However, the marginal social cost is $12. Therefore, the MEC is $12 - $8 = $4.

(Figure: MSC and Supply Curves) Use the Graph to Answer