Figure 5-1 shows a market with an externality.The current market equilibrium output of Q1 is not the economically efficient output.The economically efficient output is Q2.
-Refer to Figure 5-1.If,because of an externality,the economically efficient output is Q2 and not the current equilibrium output of Q1,what does S2 represent?
Definitions:
Legal Entities
Organizations or structures recognized by law as capable of having rights and duties, such as corporations, partnerships, and trusts.
Parent Company
A company that has controlling interest in another company or companies, known as subsidiaries.
Subsidiary
A company that is controlled by another company, known as the parent company, through ownership of more than half of its voting stock.
Fixed Assets
Long-term tangible assets used in operation of a business that are unlikely to be converted into cash within a short period.
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