Refer to the data provided in Table 16.2 below to answer the following questions.
Table 16.2
$$\begin{array} { c c c }
\text { Tons of Glass } & \text { MC } & \text { MSC } \
\hline 1 & 20 & 40 \
2 & 30 & 50 \
3 & 40 & 60 \
4 & 50 & 70 \
5 & 60 & 80 \
\hline
\end{array}$$
-Refer to Table 16.2. This glass-recycling firm is perfectly competitive and is NOT forced to take damage costs into account. If the market price of glass is $50 a ton and the firm behaves as a profit-maximizer, then total damage will be

Question

Refer to the data provided in Table 16.2 below to answer the following questions.
Table 16.2
 $$\begin{array} { c c c } 
\text { Tons of Glass } & \text { MC } & \text { MSC } \
\hline 1 & 20 & 40 \
2 & 30 & 50 \
3 & 40 & 60 \
4 & 50 & 70 \
5 & 60 & 80 \
\hline
\end{array}$$
-Refer to Table 16.2. This glass-recycling firm is perfectly competitive and is NOT forced to take damage costs into account. If the market price of glass is $50 a ton and the firm behaves as a profit-maximizer, then total damage will be

Quizplus · Accepted Answer

Since the firm is perfectly competitive, it takes the market price of glass as given. The marginal cost of producing glass is $20 a ton, and the marginal damage cost is $10 a ton. Therefore, the firm will produce at a level where marginal cost = marginal revenue, which is also equal to the market price of $50. At this level of production, the firm will also generate $10 of damage for each ton produced. Thus, the total damage caused by the firm will be the marginal damage cost per ton multiplied by the total quantity produced, which is ($10/ton) x (8 tons) = $80.

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