with the same environmental protection or more environmental protection with the same level of

output—or more of both environmental protection and output. Thus, a choice like Q inside the PPF is

more likely to represent a command-and-control policy demand than a choice like S on the frontier of

the PPF.

Chapter 13

1. No. A market demand curve reflects only the private benefits of those who are consuming the product.

Positive externalities are benefits that spill over to third parties, so they create social benefits, and are not

captured by a market (or private benefit) demand curve.

2. Clearly Samsung is benefiting from the investment, so the 20% increase in profits is a private benefit. If

Samsung is unable to capture all of the benefit, perhaps because other companies quickly copy and

produce close substitutes, then Samsung’s investment will produce social benefits.

3. a. $102 million.

b.
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