# Econ

posted by .

For a typical negative externality market graph, with Demand curve (also labelled private value), and supply curve (private cost) and a social cost curve above the supply curve. What is the optimal quantity that maximizes total economic well being? Is it where the social cost curve and demand intersect or is it at zero?

The reason i am confused is because of the demand curve (private value), does this mean the society have no benefits from it at all, so the optimal quantity is at zero? What if the demand curve does not label as private value, the optimal will be where it intersects? So i treat that demand curve as the social demand curve?

optimal quantity is where the demand curve intersects the social cost curve. With this economic model, ALL social costs of the externality are reflected in the social cost curve. That is, the social cost curve represents the sum of the private cost of the supplier and the social cost of the externality. The demand curve represents the private value of various levels of consumption -- any additional "social" value to a person's private consumption would, if present, be reflected in the supply. curve adjustment. So, yes, you could think of the private demand curve as the social demand curve as well.

## Similar Questions

1. ### Microeconomics

It has been estimated that the world demand for wheat can be represented by thefunction P = 80 - 2Q. It has been further found that the countries supplying thismarket have marginal cost curves which when summed together are given by …
2. ### Microeconomics

Can you show graphically the presence of externalities for example in the case of research and development expenditures?
3. ### Economics

An industry currently has 100 firms, all of which have fixed costs of \$16 and avg. variable cost as follows: Q Avg. Variable Cost (\$) 1 1 2 2 3 3 4 4 5 5 6 6 a. Compute marginal cost and avg. total cost. b. the price is \$10. what is …
4. ### Economics

Could you please check these thanks. Directions: Supply can decrease and increase depending upon several factors. Also you must put if that factor increase/decreases amount of supply, if the supply curves to the left/right, and if …
5. ### economics

Can you please exlain to me if I'm wrong not just correct me. ps. Ceteris paribusor the following markets, show whether change causes a shift in supply curve, a shift in demand curve, a movement along the supply curve, and/or a movement …
6. ### Econ more help please

See question below at **** Suppose local govt decides that a tax is the best way to address the inefficiency created by outdoor concerts. Assuming the social cost curve and the private cost curve are parallel to each other, how much …
7. ### economics

Producer surplus is shown graphically as the area: under the demand curve and above the market price. under the demand curve and below the market price. above the supply curve and below the market price. above the supply curve and …
8. ### Pre-calculus

You are given a pair of equations, one representing a supply curve and the other representing a demand curve, where p is the unit price for x items. 80 p + x - 380 = 0 and 84 p - x - 40 = 0 Identify which is the supply curve and demand …
9. ### economic

find the competitive price and quantity (as if the above marginal cost curve represents the market supply curve. given the market demand equation P=100-.1Q and TC=1000+20Q+.4Q^2
10. ### Econ Online

Analyze what happens to the market for cheeseburgers if the price of the cheese rises (cheese being the part of the cost of a cheesburger). Be specific and explain (or is not affected) for each of the following: 1. supply curve 2. …

More Similar Questions