Economics 9708 · AS & A Level · 7.4

7.4 — practice question

The diagram illustrates private and social marginal costs and benefits at different traffic volumes. Introducing a congestion tax shifts the MPC curve up to MPC + tax. Which area shows the resulting fall in deadweight loss?

  • Ax + y only
  • Bx + y + z
  • Cy only
  • Dz only

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