<p>AP:</a> Microeconomics</p>
<p>I tried the 2006 FR, I don't understand 3c) both parts. Can someone please explain it to me?
What is MSC, MSB, and MPC? I'm assuming MSB is equal to the price, right?</p>
<p>Thanks guys</p>
<p>For part C?</p>
<p>The MSC (social) of converting land is more than the MPC (private). It’s because of a negative externality, or a loss of scenic vistas, from converting the land.</p>
<p>And the conversion of land to residential development is not socially optimal because MSC>MSB (P). (The MSC curve is above the MPC curve)</p>
<p>Oh, and MSB is just the marginal benefit supplied by any one particular good along with any benefit it provides on its own.</p>