Figure 9.2:
-In Figure 9.2,the market demand curve is above the social demand curve because:

Question

Figure 9.2:  
-In Figure 9.2,the market demand curve is above the social demand curve because:

Quizplus · Accepted Answer

The market demand curve is above the social demand curve in the context of cigarette smoking because of the external costs (such as health care costs and reduced productivity) that are imposed on society, including non-smokers. These costs are not reflected in the market price of cigarettes, hence the discrepancy between the market and social demand curves.