Answer to Question #63567 in Economics of Enterprise for Heather
a.) Draw a completely labeled graph and illustrate on the graph how much higher electricity prices would be if the full costs of electricity production were taken into account. You do not need to provide actual numbers; rather, show on the price axis where the price would be before the externality is considered and where the price would be after the externality is considered.
The price before the externality is considered would be lower than after the externality is considered, because the costs of production increased and the amount of output sold would decrease.
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