Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 10 - Part IV - Externalities - Quick Check Multiple Choice - Page 213: 2

Answer

b) above, less

Work Step by Step

The social-cost curve lies above the supply curve because the cost to society is higher than for private individuals due to the negative externality. The socially optimal quantity is less than the equilibrium quantity because the social cost and social benefit curves intersect at a lower quantity.
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