-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city. If the marginal external cost is $10 per tonne at every quantity of steel produced, the equilibrium quantity when the steel industry is unregulated is _______ tonnes per week.
A) 25
B) 15
C) 5
D) 20

Question

-The table above shows information about the costs and benefits of a steel smelter that pollutes the air of a city. If the marginal external cost is $10 per tonne at every quantity of steel produced, the equilibrium quantity when the steel industry is unregulated is _______ tonnes per week.
A) 25 
B) 15 
C) 5 
D) 20

Quizplus · Accepted Answer

In an unregulated market, the equilibrium quantity is determined where the marginal private cost (MPC) equals the marginal private benefit (MPB). The inclusion of a marginal external cost (MEC) of $10 per tonne does not affect the unregulated equilibrium because external costs are not considered by the private market. Therefore, the correct answer is found by identifying the quantity where MPC equals MPB without considering the MEC.

-The Table Above Shows Information About the Costs and Benefits