Figure 10-1
This figure reflects the market for outdoor concerts in a public park surrounded by residential neighbourhoods.

-Refer to Figure 10-1.Why is the social cost curve above the supply curve

Question

Figure 10-1
This figure reflects the market for outdoor concerts in a public park surrounded by residential neighbourhoods.
 
-Refer to Figure 10-1.Why is the social cost curve above the supply curve

Quizplus · Accepted Answer

The social cost curve takes into account the external costs imposed on society by the concert organizers, such as noise pollution and potential disturbance of local residents. These costs are not factored into the supply curve, which only reflects the private marginal cost of organizing the concert. Therefore, the social cost curve lies above the supply curve.

Figure 10-1 This Figure Reflects the Market for Outdoor Concerts in a in a Public