The graph illustrates the unregulated market for pesticide. When the factories produce pesticide, they also create waste which they dump into 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 pesticide (that is, the marginal social cost of producing the pesticide is double the marginal private cost). What is the quantity of pesticide produced if no one owns the lake and what is the efficient quantity of pesticide? What is the deadweight loss? If no one owns the lake, the quantity of pesticide produced is tons a week. 630- 540 450- 360- 270 180- 90- 0 Price (dollars per ton) S D 15 30 45 60 75 90 105 120 135 150 Quantity (tons of pesticide per week) Q
The graph illustrates the unregulated market for pesticide. When the factories produce pesticide, they also create waste which they dump into 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 pesticide (that is, the marginal social cost of producing the pesticide is double the marginal private cost). What is the quantity of pesticide produced if no one owns the lake and what is the efficient quantity of pesticide? What is the deadweight loss? If no one owns the lake, the quantity of pesticide produced is tons a week. 630- 540 450- 360- 270 180- 90- 0 Price (dollars per ton) S D 15 30 45 60 75 90 105 120 135 150 Quantity (tons of pesticide per week) Q
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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