Suppose that the accompanying graph illustrates the marginal benefits and costs of cell phone use. S(MC private

Question:

Suppose that the accompanying graph illustrates the marginal benefits and costs of cell phone use. S(MC_private) reflects the private marginal costs of cell phone use and S(MC_social) represents the social marginal costs of cell phone use. D(MB) represents the marginal benefits of cell phone use. Suppose consumers are currently using 100 minutes per month. The negative externality is

a. $.01.

b. $.02.

c. $.03.

d. $.04.

e. $0.00.

6 5.5 5 554 4.5 4 3.5 3 2.5 D(MB) 2+ 40 S(MCprivate) -S(MCsocial) Quantity (minutes per person per month) ott