Suppose a market can be described by the following types of buyers and sellers. The extra cost of...
Question:
Suppose a market can be described by the following types of buyers and sellers. The extra cost of producing and selling each unit of the good (the same for all sellers and units sold) is due, for instance, to air pollution.
Instructions : be sure to draw the graph which has rhe demand line, the private cost(supply) line, and the social cost line (which includes the negative externality; that is shift the private cost line up by the amount of the externality). Then compare the intersections of the demand with the private cost line, on the one hand, and the social cost line, on the other hand
| Buyer value | Number of buyers | Seller private cost | Number of sellers | Extra cost of each unit (negative externality) |
|---|---|---|---|---|
| $40 | 5 | $35 | 6 | $10 |
| $33 | 10 | $25 | 6 | $10 |
| $25 | 5 | $20 | 6 | $10 |
Average revenue:
In perfect competition, the average revenue is same as the demand for commodity. A demand curve represents the various level of average revenue at which different quantity of goods are sold by the seller.
Answer and Explanation:
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In the diagram, the marginal private cost is upward sloping line and marginal social cost lies above marginal private cost which is the summation of...
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Positive Externality | Definition, Graph & Examples
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Chapter 7 / Lesson 20
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Learn what a positive externality is and why such an externality arises. Learn from positive externality graphs of production and consumption externalities.
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