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From course:

Economics A Level (DONEEEEEEE)

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Question:

Why can Externalities affect PC Markets?

Author: eric_galvao



Answer:

-Allocative Efficiency occurs P=Marginal Social Cost (Including Externalities.) but in PC Markets it’s also equal to MPC (MC) -Negative or Positive Externalities, if it followed PC Market logic, would always lead to Over or Under Consumption / Production.


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