St learned about a grain whichlea grassy hneathattraps kRnta

St learned about a grain which-lea grassy hneat?hat-traps kRnta in the Soul redlucine car ban emissions ih tho Hnus c mosph be used-a spod. n Ch For this good, naw kld is Haraina Pate Valve MPV comgare Mdivgi gincj Campineto the ( ?.private nnarket quantity Socialty efficentcvanH Pxplain aid Ce Pxpect the maret To result n aadeadwerant Loss Dul bie goo r nny not

Solution

a) the grain introduced reduces carbon emissions. This means this grain has positive externality to society.

Marginal social value of the good is the sum of private marginal value and positive external value to society. Thus marginal social value is greater than marginal private benefit.

b) marginal social cost is the difference between marginal private cost and external benefit. Thus marginal social cost is lower than private marginal cost.

c) since Marginal social value is higher than marginal private value, private market quantity is lower than socially efficient quantity.

d) deadweight loss occurs as socially efficient quantity is not produced. Whenever there is a difference between socially efficient quantity and private market quantity, there is a decrease in social welfare which results in deadweight loss.