A. demand curve for the good will overstate the true social benefits from consumption of the good. B. demand curve for the good will understate the true social benefits from consumption of the good. C. supply curve for the good will overstate the true social cost of producing the good.
Refer to Figure 4-8. The supply curve S1 and the demand curve D indicate initial conditions in the market for soft coal. A $40-per-ton tax on soft coal is levied, shifting the supply curve from S1 to S2. Which of the following states the actual burden of the tax?
Figure 5-2 illustrates the market for a product that generates an external cost. S1 is the private market supply curve, while S2 is the supply curve including the external cost. Which of the following is true? a.