pt Question 27 Not yet anewered The figure below reflects the market for outdoor

Question

pt Question 27 Not yet anewered The figure below reflects the market for outdoor concerts in a public park surrounded by residential neighbourhoods. Price P Riag question of Concerts Why is the social cost curve above the supply curve7 Select one: a. it takes into account the external costs imposed on society by the concert organizers b. Municipalties always impose noise restrictions on concerts in parks surrounded by residential neighbourhoods. C.Residents in the surrounding ne ghbourhoods get to listen to the concert for free. d. Concert tickets are likely to be resold at a higher price, making it more costly to attend the concert

Explanation / Answer

Since supply curve shows the costs borne by the private producer only and social cost curve shows private costs as well as the external costs imposed on society by the concert organisers. This is the reason why the social cost curve lies above the supply curve.

Hence option a is the correct answer.

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