Figure 4-16
Figure 4-16 shows a market with a negative externality.
-Refer to Figure 4-16.The size of marginal external costs can be determined by

Question

Figure 4-16
  Figure 4-16 shows a market with a negative externality.
-Refer to Figure 4-16.The size of marginal external costs can be determined by

Quizplus · Accepted Answer

The size of marginal external costs can be determined by calculating the difference between the supply curve with the negative externality (S₂) and the supply curve without the externality (S₁) at each output level. So, the correct option is B, which says S₂ - S₁.

Figure 4-16 Figure 4-16 Shows a Market with a Negative