externalities

Discussion in 'CT7' started by salonijain, Sep 16, 2014.

  1. salonijain

    salonijain Member

    Why does external costs of consumption look at MSB rather than MSC as it is related to ths costs to the society
     
  2. Charlie

    Charlie Member

    I think it makes more sense to think of it in terms of production and consumption.

    Consumption relates to the demand (or in this case the MSB) curve.

    Production relates to the supply (or in this case the MSC) curve.
     

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