Explain why is the net gain equal to triangle abc


Problem

External Costs with Fixed-Production Technology) Review the situation illustrated in Exhibit 1 in this chapter. If the government sets the price of electricity at the socially optimal level, why is the net gain equal to triangle abc, even though consumers now pay a higher price for electricity? What would the net gain be if the government set the price above the optimal level?

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.

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Macroeconomics: Explain why is the net gain equal to triangle abc
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