Figure 11-4 Figure 11-4 shows a market with a negative externality.
-Refer to Figure 11-4.The true marginal cost of the last unit produced is represented by the price

Question

Figure 11-4  Figure 11-4 shows a market with a negative externality.
-Refer to Figure 11-4.The true marginal cost of the last unit produced is represented by the price

Quizplus · Accepted Answer

The true marginal cost of the last unit produced is represented by the intersection of the demand curve and the social cost curve, which is point F. Therefore, the best choice is to produce at point F, where the output is Qf and the price is Pf, in order to achieve the socially optimal level of production.

Figure 11-4 Figure 11-4 Shows a Market with a Negative