QUESTION 24 55.00 50.00 45.00 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 5000 10000 15000 20000 25000 30000 35000 What is the deadweight loss from the externality a. $75,000 Ob. $100,000 c. $80,000 Od. $50,000 Supply MSC Demand 40000

QUESTION 24 55.00 50.00 45.00 40.00 35.00 30.00 25.00 20.00 15.00 10.00 5.00 5000 10000 15000 20000 25000 30000 35000 What is the deadweight loss from the externality a. $75,000 Ob. $100,000 c. $80,000 Od. $50,000 Supply MSC Demand 40000

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Externalities

Section: Chapter Questions

Problem 1QR

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Market Failure Analysis

To understand Market failure, we need to first understand welfare economics. An Italian economist, Vilfredo Pareto stated that allocation of resources in an efficient manner such that an economic change, which harms no one and makes someone better off, indicates an increase in social welfare. It is also called Pareto Optimality, where resources cannot further be reallocated without harming one. This does not apply to those economic changes, which harm some and benefit others. social welfare increases if the utility of any of its members' increases and none decrease in the economy.

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