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The Negative externalities of fast food Consumption

The Negative externalities of fast food Consumption. By John Hughes. Negative externalities of Fast Food Consumption. PMC=SMC. P fm. PMB. Q fm. Negative externalities of Fast Food Consumption. PMC=SMC. P fm. PMB. P s. SMB. Q s. Q fm. Explanation.

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The Negative externalities of fast food Consumption

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  1. The Negative externalities of fast food Consumption By John Hughes

  2. Negative externalities of Fast Food Consumption PMC=SMC Pfm PMB Qfm

  3. Negative externalities of Fast Food Consumption PMC=SMC Pfm PMB Ps SMB Qs Qfm

  4. Explanation • As a result of consumption, spillover costs such as increase public healthcare costs are lumped onto third parties (the government)

  5. Explanation • The social marginal benefit is less than the private marginal benefit of consumption. This has lead to fast food being over consumed relative to the social optimum

  6. Explanation • Therefore, fast food goods are underpriced and there will be a negative externality of this over consumption that will result in a dead weight loss of economic welfare, shown by triangle ABC on the graph.

  7. Dead weight loss to economy as a result of over consumption of fast food PMC=SMC Pfm B PMB A Ps C SMB Qs Qfm

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