Marginal Cost ( MC ): It refers to the rate by which the total cost of the produced good changes when the production increases by a single unit. As fixed cost is constant irrespective of production, so the marginal cost depends on the variable cost only in the short run. Here, is the marginal cost. is the change in total cost is the change in quantity. Marginal social cost : The increased cost for the society by any of the activity of an individual or firm is known as marginal social cost, it is calculated by summing up marginal external cost and marginal private cost. Rival and Non-rival goods: If a good or service consumed by a person alone at a time and its consumption is prevented from the other persons at that point of time then this kind of good is known as a rival good, If a good or service consumed by a person alone and its consumption is not prevented from the other persons at that point of time, then this kind of good is known as a non-rival good. Generally, private goods are treated as rival goods and public goods are treated as non-rival goods. Excludable and Non-Excludable goods: If people are prevented from the use of the good they have not paid for, then such goods are treated as excludable goods, whereas if people cannot be prevented from the use of the good they have not paid for, then such goods are treated as non-excludable goods. Marginal social benefit: The increased benefit for the society by any of the activity of an individual or firm is known as a marginal social benefit, it is calculated by summing up marginal external benefit and marginal private benefit. Individual Marginal benefit: The increased benefit for an individual by any of the activity of an individual or firm is known as the individual marginal benefit.

Question

Want to see the full answer?

Answer 1

Question

Chapter 10, Problem 14P

To determine

Concept Introduction:

Marginal Cost (MC): It refers to the rate by which the total cost of the produced good changes when the production increases by a single unit. As fixed cost is constant irrespective of production, so the marginal cost depends on the variable cost only in the short run.

Here,
is the marginal cost.

is the change in total cost

is the change in quantity.

Marginal social cost: The increased cost for the society by any of the activity of an individual or firm is known as marginal social cost, it is calculated by summing up marginal external cost and marginal private cost.

Rival and Non-rival goods: If a good or service consumed by a person alone at a time and its consumption is prevented from the other persons at that point of time then this kind of good is known as a rival good,
If a good or service consumed by a person alone and its consumption is not prevented from the other persons at that point of time, then this kind of good is known as a non-rival good. Generally, private goods are treated as rival goods and public goods are treated as non-rival goods.

Excludable and Non-Excludable goods: If people are prevented from the use of the good they have not paid for, then such goods are treated as excludable goods, whereas if people cannot be prevented from the use of the good they have not paid for, then such goods are treated as non-excludable goods.

Marginal social benefit: The increased benefit for the society by any of the activity of an individual or firm is known as a marginal social benefit, it is calculated by summing up marginal external benefit and marginal private benefit.

Individual Marginal benefit: The increased benefit for an individual by any of the activity of an individual or firm is known as the individual marginal benefit.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Suppose the exchange rate between the British pound and the U.S. dollar is £1 = $2.00. The U.S. government implementsU.S. government implements a contractionary fiscal policya contractionary fiscal policy. Illustrate the impact of this change in the market for pounds. 1.) Using the line drawing tool, draw and label a new demand line. 2.) Using the line drawing tool, draw and label a new supply line. Note: Carefully follow the instructions above and only draw the required objects.

Just Part D please, this is for environmental economics

3. Consider a single firm that manufactures chemicals and generates pollution through its emissions E. Researchers have estimated the MDF and MAC curves for the emissions to be the following: MDF = 4E and MAC = 125 – E Policymakers have decided to implement an emissions tax to control pollution. They are aware that a constant per-unit tax of $100 is an efficient policy. Yet they are also aware that this policy is not politically feasible because of the large tax burden it places on the firm. As a result, policymakers propose a two- part tax: a per unit tax of $75 for the first 15 units of emissions an increase in the per unit tax to $100 for all further units of emissions With an emissions tax, what is the general condition that determines how much pollution the regulated party will emit? What is the efficient level of emissions given the above MDF and MAC curves? What are the firm's total tax payments under the constant $100 per-unit tax? What is the firm's total cost of compliance…