Figure 15.2 Figure 15.2 shows a market with a negative externality. -Refer to Figure 15.2.The size of marginal external costs can be determined by A)S₂ + S₁at each output level. B)S₂- S₁at each output level. C)the supply curve S₂. D)the supply curve S₁.

Question

Quizplus · Accepted Answer

The size of marginal external costs can be determined by subtracting the vertical distance between the supply curve with the negative externality (S₁) and the socially optimal supply curve (S₂) at each output level, which is given by S₂- S₁.

Figure 152 Figure 15