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A-Level Economics · Negative consumption externality diagram question

Which area is the WELFARE LOSS from overconsumption?

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The diagram

The answer

The triangle F E G. Units 3→5 cost society (S) more than their TRUE benefit (MSB) — triangle FEG is pure loss, pointing at the optimum. Between optimum (F) and market (E) each unit's cost on S exceeds its social benefit on MSB — triangle FEG is the loss from those cigarettes.

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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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