3. The effect of negative externalities on the optimal quantity of consumption Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of bolts imposes a constant external cost of $385 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for bolts. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $385 per ton. ? PRICE (Dollars per ton of bolts) 1100 900 880 770 000 550 440 330 220 110 0 0 O 1 Q O 3 5 QUANTITY (Tons of bolts) 6 W Supply (Private Cost) Demand (Private Value) Social Cost

3. The effect of negative externalities on the optimal quantity of consumption Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of bolts imposes a constant external cost of $385 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for bolts. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $385 per ton. ? PRICE (Dollars per ton of bolts) 1100 900 880 770 000 550 440 330 220 110 0 0 O 1 Q O 3 5 QUANTITY (Tons of bolts) 6 W Supply (Private Cost) Demand (Private Value) Social Cost

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

please draw the social cost line

Note:-

Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.

3. The effect of negative externalities on the optimal quantity of consumption
Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living
downstream from the factory. Producing an additional ton of bolts imposes a constant external cost of $385 per ton. The following graph shows the
demand (private value) curve and the supply (private cost) curve for bolts.
Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $385 per ton.
PRICE (Dollars per ton of bolts)
1100
900
880
770
000
550
440
330
220
110
0
0
O
1
Q
O
4
3
5
QUANTITY (Tons of bolts)
6
W
Supply
(Private Cost)
Demand
(Private Value)
Social Cost

Definition Definition Total cost incurred by the producers of goods and services as well as anyone who is impacted by the production of the commodity in terms of external cost.

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