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The Figure Shows the Unregulated Market for a Pesticide, Where

Question 425

Multiple Choice

  The figure shows the unregulated market for a pesticide, where S is the supply curve and D is the demand curve. The demand curve is the same as the MSB curve. When factories produce the pesticide, they also create waste, which they dump into a lake on the outskirts of the town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing the pesticide. -In the figure above, if no one owns the lake, at the equilibrium quantity what is the marginal social cost of producing the pesticide? A)  $80 B)  $40 C)  $60 D)  $30 The figure shows the unregulated market for a pesticide, where S is the supply curve and D is the demand curve. The demand curve is the same as the MSB curve. When factories produce the pesticide, they also create waste, which they dump into a lake on the outskirts of the town. The marginal external cost of the dumped waste is equal to the marginal private cost of producing the pesticide.
-In the figure above, if no one owns the lake, at the equilibrium quantity what is the marginal social cost of producing the pesticide?


A) $80
B) $40
C) $60
D) $30

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