A using the labeling on the graph identify the area

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Unformatted text preview: enotes marginal social benefit. (a) Using the labeling on the graph, identify the area representing each of the following at the market equilibrium. (i) The consumer surplus (ii) The producer surplus (b) Assume that the production of each unit of candy creates a negative externality equal to (p5-p2). Using the labeling on the graph, identify the socially optimal quantity. (c) Assume that the government imposes a per-unit tax of (p5-p2) to correct for the negative externality. Using the labeling on the graph, identify the area representing each of the following. (i) The consumer surplus (ii) The deadweight loss STOP END OF EXAM © 2010 The College Board. Visit the College Board on the Web: www.collegeboard.com. -4-...
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This note was uploaded on 02/03/2014 for the course ECONOMIC 112 taught by Professor Van le during the Fall '12 term at American Internation College.

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