Economics (AS & A Level) · Oct / Nov 2022 · Paper 33 · Question 3
9708Private costs and benefits, externalities and social costs and benefits
The diagram shows the marginal private benefit (MPB), the marginal private cost (MPC) and the marginal social cost (MSC) of a firm producing chemicals. In a free market, price is at P1. Which quantity measures the overproduction of chemicals resulting in the negative production externality?
- AQ1,Q2
- BQ1,Q3
- CQ2,Q3
- DQ3,Q4
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Correct answer: C. Q2,Q3
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