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So to my knowledge, the competitve equilibrium would be Marginal cost= Marginal private benefit. My question is, how would you determine what the pareto efficiency is from the Marginal social benefit line when it is shifted outwards from MPB?

Is there also a deadweight loss at competitve equilibrium?

Thanks in advance for any help!

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  • $\begingroup$ Do you mean HOW "would you determine what the pareto efficiency is from the Marginal social benefit line when it is shifted outwards from MPB"? $\endgroup$ – Giskard Nov 19 '15 at 12:05
  • $\begingroup$ The Wikipedia page for deadweight loss is very useful in seeing whether there is any at competitve equilibrium, it shows from the figure to the right. en.wikipedia.org/wiki/Deadweight_loss $\endgroup$ – Giskard Nov 19 '15 at 12:06
  • $\begingroup$ Thanks for the link. Sorry for the misunderstanding, I meant to say "how". I learned that the pareto eifficiency is when the MSB= MC and the difference of area between the competitive equilibrium and the pareto efficiency is the DWL. Is this correct? $\endgroup$ – mathenator2015 Nov 19 '15 at 18:33
  • $\begingroup$ I don't know what you mean by "difference of area between the competitive equilibrium and the pareto efficiency". $\endgroup$ – Giskard Nov 19 '15 at 20:52

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