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above figure. S 1 is the supply curve that includes only private costs. S 2 is the supply curve that includes social costs. If the

above figure. S 1 is the supply curve that includes only private costs. S 2 is the supply curve that includes social costs. If the firm sets output by focusing on private costs, the per-unit external cost will equal P 2. P 4 - P 2. P 4 - P 1. P 2 - P 1

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