How to find social demand curve?
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01-16-2013, 03:02 PM
Post: #1
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How to find social demand curve?
I am so confused on how I am supposed to find the social demand curve .
If a product generates external cost in consumption of $4 per unit and the market price is 8$ at 7 units, how would I calculate the social demand curve? Please help, I really need an explanation on how I would find a social demand curve, my book doesn't give a good example and I can't find any information on youtube or anywhere else. Ads |
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01-16-2013, 03:10 PM
Post: #2
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I guess that it is negative external cost which causes the social demand curve to be under the private demand curve. The marginal social benefit will be smaller than the marginal private benefit. The producer should be taxed 4% from the price.
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