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A-Level Economics · Negative production externality diagram question

Which area is the WELFARE LOSS from the market overproducing?

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The diagram

The answer

The triangle F G E. Units 3→5 cost society (MSC) more than they're worth (D) — the wedge FGE is pure loss. Between the optimum (F) and market output (E), every unit's MSC exceeds its benefit on D. Triangle FGE sits on those overproduced units, pointing at the optimum.

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

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