Question

figure 5 - 2

figure 5 - 2 shows a market with a negative externality.

refer to figure 5 - 2. the efficient output level is

qb - qd

qd

qa

qb

Explanation:

In a market with a negative externality, the efficient output level occurs where the marginal social cost (which includes the private cost and the external cost) equals the demand (which represents marginal social benefit). Looking at the figure, this intersection is at the quantity \(Q_d\).

Answer:

\(Q_d\)