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downstream from the factory. Producing an additional ton of bolts imposes a constant marginal external cost (MEC) of $315 per ton. The following graph shows the demand (marginal private benefits, or MPB) curve and the supply (marginal private costs, or MPC) curve for bolts. Use the purple points (diamond symbol) to plot the marginal social costs (MSC) curve when the marginal external cost is $315 per ton. PRECE (Dolars per ton of bots) 010 640 210 100 2 QUANTITY (Tons of bolts) 6 Supply (MPC) Demand (MPB) MSC

downstream from the factory. Producing an additional ton of bolts imposes a constant marginal external cost (MEC) of $315 per ton. The following graph shows the demand (marginal private benefits, or MPB) curve and the supply (marginal private costs, or MPC) curve for bolts. Use the purple points (diamond symbol) to plot the marginal social costs (MSC) curve when the marginal external cost is $315 per ton. PRECE (Dolars per ton of bots) 010 640 210 100 2 QUANTITY (Tons of bolts) 6 Supply (MPC) Demand (MPB) MSC

ECON MICRO
ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 2.5P
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please label the MSC points on graph thank you

Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of bolts imposes a constant marginal external cost (MEC) of $315 per ton. The following graph shows the demand (marginal private benefits, or MPB) curve and the supply (marginal private costs, or MPC) curve for bolts. Use the purple points (diamond symbol) to plot the marginal social costs (MSC) curve when the marginal external cost is $315 per ton. PRECE (Dollars per ton of bots) 810 720 630 540 450 270 100 90 2 D 3 QUANTITY (Tons of bolts) 6 Supply (MPC) Demand (MPB) MSC
Transcribed Image Text:Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of bolts imposes a constant marginal external cost (MEC) of $315 per ton. The following graph shows the demand (marginal private benefits, or MPB) curve and the supply (marginal private costs, or MPC) curve for bolts. Use the purple points (diamond symbol) to plot the marginal social costs (MSC) curve when the marginal external cost is $315 per ton. PRECE (Dollars per ton of bots) 810 720 630 540 450 270 100 90 2 D 3 QUANTITY (Tons of bolts) 6 Supply (MPC) Demand (MPB) MSC
The market equilibrium quantity is, tons of bolts, but the socially optimal quantity of bolt production is To create an incentive for the firm to produce the socially optimal quantity of bolts, the government could impose a of bolts. tons. of $ per ton
Transcribed Image Text:The market equilibrium quantity is, tons of bolts, but the socially optimal quantity of bolt production is To create an incentive for the firm to produce the socially optimal quantity of bolts, the government could impose a of bolts. tons. of $ per ton
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