part 3 4 needed just1b. Imagine that Sunflower, a private company, recycles bottles and supplies to beverage companies. The following table shows the company’s private marginal costs and external benefits to the society from the company’s recyclingOutput(‘00’ Kwh)Price (£)Marginal (private) costs (£)Marginal external benefit (£)Marginal social cost (£)1806420 2806020 3806016 4806412 580688 680728 780808 880888 980968 10801124 Fill in the column for marginal social costAssuming no government intervention, how much will the firm produce to maximise profits and why?3. What is the socially optimum level of output and why?4.What subsidy per (‘000’) would the government have to pay the company to encourage it to produce this level of output?

Externality refers to an economic activities of one person which have impact on others person's…

Answered: 3. What is the socially optimum level…

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter14: Environmental Economics

Section: Chapter Questions

Problem 7SQ

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part 3 4 needed just

1b. Imagine that Sunflower, a private company, recycles bottles and supplies to beverage companies. The following table shows the company’s private marginal costs and external benefits to the society from the company’s recycling

Output (‘00’ Kwh)	Price (£)	Marginal (private) costs (£)	Marginal external benefit (£)	Marginal social cost (£)
1	80	64	20
2	80	60	20
3	80	60	16
4	80	64	12
5	80	68	8
6	80	72	8
7	80	80	8
8	80	88	8
9	80	96	8
10	80	112	4

Fill in the column for marginal social cost
Assuming no government intervention, how much will the firm produce to maximise profits and why?

3. What is the socially optimum level of output and why?

4.What subsidy per (‘000’) would the government have to pay the company to encourage it to produce this level of output?

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