individual versus social costs and benefits

Aa Aa UNLIMITED 3. Individual versus social costs and benefits In addition to providing private benefit to the individuals who purchase them, solar panels also benefit society as a owse Catalog whole by reducing global energy consumption. This additional benefit to society is known as a Because individuals who purchase solar panels bear the full cost but do not receive the artner full benefit of solar panel installations, the private equilibrium quantity (market quantity) of solar panels in an unsubsidized market is the social equilibrium quantity. Print Options College Success The graph below represents the annual private benefit of solar panels to consumers and the private cost of solar panels to producers. Assume that, in addition to the benefit to individual buyers, the rest of society gets an additional Career Center $60,000 benefit from each house installed with solar panels. The social benefit (MSB) of each solar panel installation s, therefore, $60,000 more than the private benefit at each quantity. MMENDED FOR YOU Use the green line (triangle symbols) to graph the social benefit curve on the graph below. Study Tools PRICE [Thousands of dollars) 200 MSB ly Tools for Principles of 180 AA nomics 160 Points on new D ... 140 X 120 Help 100 D with tax credit + + Give Feedback 60 40 20 2 3 4 5 6 7 8 9 10 QUANTITY (Thousands of installations per year) Help Clear All After plotting the social benefit curve, you can see that the social equilibrium quantity exceeds the private equilibrium quantity (market quantity) by installations per year. Now imagine the government introduces a 40% tax credit for solar panel installations. This means that homeowners can deduct 40% of the cost of their installation from the amount they pay in taxes. For example, at the original Type here to search O W e Desktop F1 F2 DII X F3 F4 F5 F6 F7 PrtSen F8 H @ # of 2 3 4 5 6 W E R T Y U S D F G H X C V B N M