-The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. The marginal private cost when output equals 2 tons of paper per week equals
A) $50 per ton.
B) $100 per ton.
C) $150 per ton.
D) $200 per ton.

Question

-The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake. The marginal private cost when output equals 2 tons of paper per week equals
A) $50 per ton. 
B) $100 per ton. 
C) $150 per ton. 
D) $200 per ton.

Quizplus · Accepted Answer

The marginal private cost is the cost of producing one more unit of output. In this case, the marginal private cost is the cost of producing one more ton of paper. The marginal private cost is equal to the marginal cost of production plus the marginal external cost. The marginal cost of production is the cost of producing one more unit of output, excluding any external costs. In this case, the marginal cost of production is $50 per ton. The marginal external cost is the cost of the pollution runoff that is caused by producing one more unit of output. In this case, the marginal external cost is $50 per ton. Therefore, the marginal private cost is $50 per ton plus $50 per ton, which equals $100 per ton.

-The Figure Above Shows the Costs Associated with Producing Paper