Compare market price and quantity of steel to socially optimal price and quantity if steel producers ignore soot emitted from their smokestacks. Use a graph to assist your explanation
What will be an ideal response?
The market results in too low a price and too large a quantity of steel. If soot were included as a cost, supply would shift up (to the left) and price would increase, along with a decrease in quantity. This may be illustrated as in Figure 17-1.
Figure 17-1
Economics
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a. True b. False
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A production function is
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