Widgets are provided by a single monopolist, whose production process pollutes the surrounding environment. The U.S. government is thinking about breaking the monopoly up into a large number of small firms, who would then form a competitive industry. The small firms would use exactly the same production process as the large firm; thus, a breakup would not affect either the private or the social marginal cost curve. Conditions in the industry are summarized by the following graph.

Suppose that you are called upon to advise the government as to whether breaking up the monopoly would improve social welfare. A magic oracle offers to reveal to you the exact numerical values of any three labeled areas in the graph. To help you give accurate advice, which three areas would you choose?Why?

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Price MCocial MI MR Quantity