Refer to the data provided in Table 16.1 below to answer the following questions.
Table 16.1 $$\begin{array} { c l l }
\text { Tons of Salt } & \text { MC } & \text { MSC } \
\hline 1 & 10 & 20 \
2 & 20 & 30 \
3 & 30 & 40 \
4 & 40 & 50 \
5 & 50 & 60
\end{array}$$
-Refer to Table 16.1. This salt processing firm is perfectly competitive and is forced to take damage costs into account. If the market price of the product is $30, the firm will produce

Question

Refer to the data provided in Table 16.1 below to answer the following questions.
Table 16.1 $$\begin{array} { c l l } 
\text { Tons of Salt } & \text { MC } & \text { MSC } \
\hline 1 & 10 & 20 \
2 & 20 & 30 \
3 & 30 & 40 \
4 & 40 & 50 \
5 & 50 & 60
\end{array}$$
-Refer to Table 16.1. This salt processing firm is perfectly competitive and is forced to take damage costs into account. If the market price of the product is $30, the firm will produce

Quizplus · Accepted Answer

In a perfectly competitive market, the firm will produce where the market price equals the marginal cost (MC). At 2 tons, MC is $20, which is less than the price of $30, and at 3 tons, MC is $30, which matches the price. However, since the firm must also consider marginal social cost (MSC), it will produce where MSC equals the price, which is at 2 tons where MSC is $30.

Refer to the Data Provided in Table 16 -Refer to Table 16