figure 3 below shows a scenario where a private firm was polluting the environment (causing a negative externality). the government then fined the firm by imposing a tax (shown by the vertical distance, c). as a result, original equilibrium which reflected only private costs changed to the new equilibrium which now shows social costs being incorporated. (hint: private costs are less than social costs) Which letter stands for Private Costs (or Private Marginal Costs)?
A
B
C
D
E
Which letter stands for Social Costs (or Social Marginal Costs)?
A
B
C
D
E
