3. Assume that a mining company that produces ore sells its product for $40 per ton. Also assume that the $40/ton price represents both the private and social benefit per ton. In producing ore, the mining company incurs costs, represented by MPC. Furthermore, the pollution the company generates travels down stream to impose additional "external" costs on society, represented by MEC. Both the private costs to the firm and external costs are as follows. Ore Mined (tons) MPC to firm ($/ton) MEC ($/ton) $7 $5 $11 $16 12345 1 2 3 4 5 $15 $24 $40 $45 $26 $35
3. Assume that a mining company that produces ore sells its product for $40 per ton. Also assume that the $40/ton price represents both the private and social benefit per ton. In producing ore, the mining company incurs costs, represented by MPC. Furthermore, the pollution the company generates travels down stream to impose additional "external" costs on society, represented by MEC. Both the private costs to the firm and external costs are as follows. Ore Mined (tons) MPC to firm ($/ton) MEC ($/ton) $7 $5 $11 $16 12345 1 2 3 4 5 $15 $24 $40 $45 $26 $35
Chapter14: Environmental Economics
Section: Chapter Questions
Problem 7SQ
Related questions
Question
A) If the firm only considers its private benefits and costs, what level of production will
occur?
B) From a social perspective, what’s the socially efficient level of production?
C) What kind of policy would ensure a social efficient outcome in this case?
![3. Assume that a mining company that produces ore sells its product for $40 per ton. Also
assume that the $40/ton price represents both the private and social benefit per ton. In
producing ore, the mining company incurs costs, represented by MPC. Furthermore, the
pollution the company generates travels down stream to impose additional "external" costs
on society, represented by MEC. Both the private costs to the firm and external costs are as
follows.
Ore Mined (tons)
1
2345
MPC to firm ($/ton) MEC ($/ton)
$7
$15
$24
$40
$45
$5
$11
$16
$26
$35](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd2d831b4-f3da-4af5-9601-1a3a532834b5%2F57e0a03f-5324-480f-9751-560a92d7e58f%2Fs06g2qr_processed.png&w=3840&q=75)
Transcribed Image Text:3. Assume that a mining company that produces ore sells its product for $40 per ton. Also
assume that the $40/ton price represents both the private and social benefit per ton. In
producing ore, the mining company incurs costs, represented by MPC. Furthermore, the
pollution the company generates travels down stream to impose additional "external" costs
on society, represented by MEC. Both the private costs to the firm and external costs are as
follows.
Ore Mined (tons)
1
2345
MPC to firm ($/ton) MEC ($/ton)
$7
$15
$24
$40
$45
$5
$11
$16
$26
$35
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