Consider the competitive market for production of a chemical as shown in the diagram below. This setup will apply to this question and the next two questions. P ($/gallon) Demand: P=220-Q/100 Supply: P=Q/400 Q (gallons) Production of this chemical produces noxious odors that impact the health of the communities surrounding the production facilities. It is well known that every gallon produced increases health costs in society, but there is a lot of argument over how much health costs increase. In reality the number is that health costs increase by $3 per gallon produced, but that it hard to discover.

Consider the competitive market for production of a chemical as shown in the diagram below. This setup will apply to this question and the next two questions. P ($/gallon) Demand: P=220-Q/100 Supply: P=Q/400 Q (gallons) Production of this chemical produces noxious odors that impact the health of the communities surrounding the production facilities. It is well known that every gallon produced increases health costs in society, but there is a lot of argument over how much health costs increase. In reality the number is that health costs increase by $3 per gallon produced, but that it hard to discover.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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