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From course:

Economics A Level (DONEEEEEEE)

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Question:

How can a Consumption Externalities be shown on a Diagram and say where the Lines would be for Negative and Positive

Author: eric_galvao



Answer:

-Same X and Y Axis as the Production Externality Graph -Marginal Private Benefit [MPB] will be One Line - Shows the Benefit of Consuming the Last Unit of Good -Marginal Social Benefit [MSB] will be another Line - Shows the MPB and External Outcome -Difference between MPB and MSB is the External Benefit -If the MPB is Higher than the MSB, its Negative. If MPB is Lower than the MSB, its Positive


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