Exhibit 17.1

-Refer to Exhibit 17.1,which shows a market for electricity.The marginal social cost exceeds society's marginal benefit of electricity at _____
A) point a.
B) point b.
C) point c.
D) point d.
E) demand curve D.

Question

Exhibit 17.1
 
-Refer to Exhibit 17.1,which shows a market for electricity.The marginal social cost exceeds society's marginal benefit of electricity at _____
A) point a. 
B) point b. 
C) point c. 
D) point d. 
E) demand curve D.

Quizplus · Accepted Answer

At point B, the quantity exchanged in the market is where the marginal social cost (MSC) intersects the demand curve (MB), which is below the equilibrium quantity where supply intersects demand (point E). This implies that at the quantity exchanged in the market, the negative externalities associated with electricity production are not internalized, leading to a welfare loss to society.

Exhibit 17.1 -Refer to Exhibit 17.1,which Shows a Market for Electricity.The Marginal