The graph shows the unregulated market for electricity. The marginal external cost of the pollution created is equal to the marginal private cost of producing electricity at every quantity of electricity produced. XXX Draw a point to show the marginal social cost when production is 500 kilowatts per day. Label it 1. Draw the marginal social cost curve. Label it MSC. Draw a point to show the quantity of electricity produced with no pollution control and the marginal social cost of the electricity generated. Label it 2. Draw a shape to show the deadweight loss with no pollution control. Label it DWL. The deadweight loss created by the pollution is s >>> Remember that the price given on the y-axis is in cents but you must answer in dollars. 24- 20- 16- 12- 8- Price and cost (cents per kilowatt) 100 S=MC D 300 400 200 Quantity (kilowatts per day) >>> Draw only the objects specified in the question. 500 600
The graph shows the unregulated market for electricity. The marginal external cost of the pollution created is equal to the marginal private cost of producing electricity at every quantity of electricity produced. XXX Draw a point to show the marginal social cost when production is 500 kilowatts per day. Label it 1. Draw the marginal social cost curve. Label it MSC. Draw a point to show the quantity of electricity produced with no pollution control and the marginal social cost of the electricity generated. Label it 2. Draw a shape to show the deadweight loss with no pollution control. Label it DWL. The deadweight loss created by the pollution is s >>> Remember that the price given on the y-axis is in cents but you must answer in dollars. 24- 20- 16- 12- 8- Price and cost (cents per kilowatt) 100 S=MC D 300 400 200 Quantity (kilowatts per day) >>> Draw only the objects specified in the question. 500 600
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Follow-up Question
The graph shows the unregulated market for electricity.
Suppose that at every quantity produced, the marginal external cost of electricity equals the marginal private cost of production.
To show the market outcome, draw the following four items on the graph:
1. Draw a point to show the marginal social cost when the utility produces 500 kilowatts per day. Label it 1.
2. Draw the marginal social cost curve. Label it
MSC
.
3. Draw a point to show the electricity produced and its marginal social cost. Label it 2.
4. Draw a shape to show the deadweight loss created. Label it
DWL
.
>>>
Draw only the objects specified in the
question.
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