Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $490 per unit. PRICE (Dollars per unit of electric cars) 1400 1260 1120 980 840 700 560 420 280 140 0 O 0 O Supply (Private Cost) Demand (Private Value) Social Cost

Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $490 per unit. PRICE (Dollars per unit of electric cars) 1400 1260 1120 980 840 700 560 420 280 140 0 O 0 O Supply (Private Cost) Demand (Private Value) Social Cost

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 10PAE

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Question

Homework
Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $490 per unit.
PRICE (Dollars per unit of electric cars)
1400
1260
1120
980
840
700
560
420
280
140
0
0
☐
O
O
☐ Supply
(Private Cost)
6
Demand
(Private Value)
Social Cost

Expert Solution

Step 1

Externality:

Externality refers to the situation of a person engaging in activities that may influence the well-being of bystanders without any compensation payments or receipts.

When this impact benefits the bystander, it is called a positive externality and when this impact is negative to the bystander, it is called a negative externality. The negative externality is a social cost to society.

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