00:01
So here we're thinking about market efficiency, right? and efficiency means where you are getting sort of max net benefits, right? and in a marketplace, if we think about quantity and price, this usually happens marginal benefit, marginal cost, where this is equal, right? you wanna produce as long as marginal benefit is greater than marginal cost, including all costs.
00:27
So the first one we have, so we have price equal to mc, but air pollution.
00:34
So this one here would be market failure.
00:39
Market failure, because, right? we have the externality is not accounted for.
00:50
The marginal unit, right? you will have, if price is equal to marginal benefit, and this is equal to marginal cost, but this is of course less than marginal cost plus the pollution damage...
