Question

figure 5 - 2 shows a market with a negative externality. refer to figure 5 - 2. the size of marginal external costs can be determined by the supply curve $s_1$ $s_2+s_1$ at each output level. the supply curve $s_2$ $s_2 - s_1$ at each output level. question 7 1 pts conceptually, the efficient level of carbon emissions is the level for which the marginal cost of reducing carbon emissions is minimized. the level for which the marginal benefit of reducing carbon emissions is minimized and the marginal cost of reducing carbon emissions is maximized. the level for which the marginal benefit of reducing carbon emissions is maximized. probably not zero.

Explanation:

• For the first question: In a market with a negative externality, the marginal external cost is the difference between the social cost (represented by \(S_{2}\)) and the private cost (represented by \(S_{1}\)). So, it is \(S_{2}-S_{1}\) at each output level.
• For the second question: The efficient level of carbon emissions is not zero. Reducing carbon emissions has both costs (e.g., cost of new technologies, reduced production in some carbon - intensive industries) and benefits (e.g., reduced environmental damage, less health - related costs from pollution). The marginal cost of reducing emissions is not always minimized at zero emissions (as there are still some benefits to be gained from a small amount of emissions in some cases where the marginal benefit of a small amount of emissions is positive). Also, we look for a balance where marginal benefit of reducing emissions equals marginal cost of reducing emissions, which is not at zero in most practical scenarios.

Answer:

• First question: \(S_{2}-S_{1}\) at each output level.
• Second question: probably not zero.