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A-Level Economics · Negative consumption externality diagram question

Which point is the SOCIAL optimum?

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The diagram

The answer

Point F. Where TRUE benefit (MSB) meets cost: point F, quantity 3. Not zero — the ban question is a different debate. Count the harm to others: MSB crosses S at point F, quantity 3 — society wants consumption cut, not eliminated.

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This is one of 5 questions on the negative consumption externality diagram — every corner lettered, every wrong answer diagnosed.

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