esticide (that is, the marginal social cost of producing the pesticide is double the marginal pr uppose that no one owns the lake and that the government levies a pollution tax. raw a point to show marginal social cost if production is 80 tons. raw the MSC curve and label it. raw an arrow at the efficient quantity that shows the marginal external cost. he tax per ton of pesticide that achieves the efficient quantity of pollution is s

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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52

The graph illustrates the unregulated market for pesticide. The factories dump their waste in
a lake on the outskirts of a small town.
The marginal external cost of the dumped waste is equal to the marginal private cost of producing the
pesticide (that is, the marginal social cost of producing the pesticide is double the marginal private cost).
Suppose that no one owns the lake and that the government levies a pollution tax.
C
Draw a point to show marginal social cost if production is 80 tons.
Draw the MSC curve and label it
Draw an arrow at the efficient quantity that shows the marginal external cost.
The tax per ton of pesticide that achieves the efficient quantity of pollution is S
540
480-
420-
360-
300-
240-
180-
120-
60+
0+
0
Price and cost (dollars per ton)
20
80
S
ID
40
60
Quantity (tons per week)
>>> Draw only the objects specified in the question.
Q
100
Transcribed Image Text:The graph illustrates the unregulated market for pesticide. The factories dump their waste in a lake on the outskirts of a small town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing the pesticide (that is, the marginal social cost of producing the pesticide is double the marginal private cost). Suppose that no one owns the lake and that the government levies a pollution tax. C Draw a point to show marginal social cost if production is 80 tons. Draw the MSC curve and label it Draw an arrow at the efficient quantity that shows the marginal external cost. The tax per ton of pesticide that achieves the efficient quantity of pollution is S 540 480- 420- 360- 300- 240- 180- 120- 60+ 0+ 0 Price and cost (dollars per ton) 20 80 S ID 40 60 Quantity (tons per week) >>> Draw only the objects specified in the question. Q 100
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