The following table shows the marginal private cost (MPC) and the marginal social cost (MSC) of a chemical factory. $$\begin{array} { c c c }
\hline \text { Tons of Chemicals } & \text { MPC } & \text { MSC } \
\hline 1 & 100 & 120 \
2 & 110 & 130 \
3 & 120 & 140 \
4 & 130 & 150 \
5 & 140 & 160 \
\hline
\end{array}$$ Answer the following questions:
(1) What is the marginal cost of the factory's externality? Is it constant at all quantities?
(2) If the factory is a perfectly competitive firm and is not required by the government to internalize its external cost, how many tons should the factory produce, given that the market price of a ton of chemicals is $130?
(3) If the factory is a perfectly competitive firm and is required by the government to internalize its external cost, how many tons should the factory produce, given that the market price of a ton of chemicals is $130?
(4) Draw a graph illustrating your answers.

Question

The following table shows the marginal private cost (MPC) and the marginal social cost (MSC) of a chemical factory. $$\begin{array} { c c c } 
\hline \text { Tons of Chemicals } & \text { MPC } & \text { MSC } \
\hline 1 & 100 & 120 \
2 & 110 & 130 \
3 & 120 & 140 \
4 & 130 & 150 \
5 & 140 & 160 \
\hline
\end{array}$$ Answer the following questions:
(1) What is the marginal cost of the factory's externality? Is it constant at all quantities?
(2) If the factory is a perfectly competitive firm and is not required by the government to internalize its external cost, how many tons should the factory produce, given that the market price of a ton of chemicals is $130?
(3) If the factory is a perfectly competitive firm and is required by the government to internalize its external cost, how many tons should the factory produce, given that the market price of a ton of chemicals is $130?
(4) Draw a graph illustrating your answers.

Quizplus · Accepted Answer

The Answer of The following table shows the marginal private cost (MPC) and the marginal social cost (MSC) of a chemical factory. $$\begin{array} { c c c } 
\hline \text { Tons of Chemicals } & \text { MPC } & \text { MSC } \
\hline 1 & 100 & 120 \
2 & 110 & 130 \
3 & 120 & 140 \
4 & 130 & 150 \
5 & 140 & 160 \
\hline
\end{array}$$ Answer the following questions:
(1) What is the marginal cost of the factory's externality? Is it constant at all quantities?
(2) If the factory is a perfectly competitive firm and is not required by the government to internalize its external cost, how many tons should the factory produce, given that the market price of a ton of chemicals is $130?
(3) If the factory is a perfectly competitive firm and is required by the government to internalize its external cost, how many tons should the factory produce, given that the market price of a ton of chemicals is $130?
(4) Draw a graph illustrating your answers.

The Following Table Shows the Marginal Private Cost (MPC) and the Marginal