Suppose that the market for marijuana is shown in the accompanying graph, where MC_(private) represents the private supply curve and MC_(social) represents the social supply curve that reflects the full social marginal costs of marijuana. MB_(social), is the demand curve and represents the private and social marginal benefits of marijuana. The gap between MC_(social) and MC_(private) represents

a. The difference between the private and social benefits of marijuana production and consumption

b. The negative externalities associated with marijuana production and consumption

c. The difference between the market price of marijuana and the actual private cost involved in producing marijuana

d. Producer surplus

e. Consumer surplus

Transcribed Image Text:

Price per ounce MB (social) 4000 3750 3500 3250 3000 2750 2500 2250 2000 1750 1500- 1250 1000 MC (private) Quantity (number of ounces/week) MC (social) 600