2023, Set 2, Question 1 · Long · 10 points
Profitable competitive firm with a positive externality
Compare accounting and economic profit, then draw side-by-side market and firm graphs showing short-run profit and the move to long-run equilibrium. Finally decide how a spillover benefit compares market output to the efficient level and what fixing it does to total surplus.
1 Read the question
The question is College Board's, from the 2023, Set 2 exam. It starts on page 3 of the PDF.
2 Write your answer
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Scoring guidelines (PDF, page 2) What the exam readers saw (Chief Reader report)
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