The graph shows the unregulated market for electricity. Suppose that at every quantity produced, the marginal external cost of electricity equals the marginal private cost of production. To show the market outcome, draw the following four items on the graph: 1. Draw a point to show the marginal social cost when the utility produces 500 kilowatts per day. Label it 1. 2. Draw the marginal social cost curve. Label it MSC. 3. Draw a point to show the electricity produced and its marginal social cost. Label it 2. 4. Draw a shape to show the deadweight loss created. Label it DWL. >>> Draw only the objects specified in the question. 24- 20 16 12 B- Price and cost (cents per kilowatt) 10 100 200 300 S=MC 400 500 600 Quantay (kikowatts per day)
The graph shows the unregulated market for electricity. Suppose that at every quantity produced, the marginal external cost of electricity equals the marginal private cost of production. To show the market outcome, draw the following four items on the graph: 1. Draw a point to show the marginal social cost when the utility produces 500 kilowatts per day. Label it 1. 2. Draw the marginal social cost curve. Label it MSC. 3. Draw a point to show the electricity produced and its marginal social cost. Label it 2. 4. Draw a shape to show the deadweight loss created. Label it DWL. >>> Draw only the objects specified in the question. 24- 20 16 12 B- Price and cost (cents per kilowatt) 10 100 200 300 S=MC 400 500 600 Quantay (kikowatts per day)
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter12: Environmental Protection And Negative Externalities
Section: Chapter Questions
Problem 40P: Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in...
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Transcribed Image Text:on 4-Diet An...
The graph shows the unregulated market for electricity.
Suppose that at every quantity produced, the marginal external cost of
electricity equals the marginal private cost of production.
To show the market outcome, draw the following four items on the graph:
1. Draw a point to show the marginal social cost when the utility produces 500
kilowatts per day. Label it 1.
2. Draw the marginal social cost curve. Label it MSC.
3. Draw a point to show the electricity produced and its marginal social cost.
Label it 2.
4. Draw a shape to show the deadweight loss created. Label it DWL.
>>> Draw only the objects specified in the question.
02
Price and cost (cents per kilowatt)
400
500
300
CLARITY Akilanwalts per day)
S=MC
O
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