The figure shows the marginal private cost and marginal social cost of producing bananas while using pesticides. The per-tonne price of bananas is constant at $400. Costs (5) 900 800 700 600 500 400 300 200 100 Marginal social cost Costs imposed on fisherman by plantations using Weevokil $270 At A, reducing production by one ton reduces plantation's profits by $400. A is the banana producers' profit-maximizing outcome. The marginal external cost at A is $670. A is the Pareto optimal outcome. Based on the figure, which of the following statements regarding point A is correct? Marginal private cost 0 0 10,000 20,000 30,000 40,009 50.000 60.000 70.000 80.000 90,000 100,000 Quantity of bananas, Q (tonnes per year) Price

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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The figure shows the marginal private cost and marginal social cost of producing bananas while using
pesticides. The per-tonne price of bananas is constant at $400.
Costs (5)
900
800
700
600
500
400
300
200
100
Marginal social cost
Costs imposed on fisherman by plantations using Weevokil
$270
At A, reducing production by one ton reduces plantation's profits by $400.
A is the banana producers' profit-maximizing outcome.
The marginal external cost at A is $670.
A is the Pareto optimal outcome.
Based on the figure, which of the following statements regarding point A is correct?
Marginal
private cost
0
0 10,000 20,000 30,000 40,009 50,000 60,000 70,000 80,000 90,000 100,000
Quantity of bananas, Q (tonnes per year)
Price
Transcribed Image Text:The figure shows the marginal private cost and marginal social cost of producing bananas while using pesticides. The per-tonne price of bananas is constant at $400. Costs (5) 900 800 700 600 500 400 300 200 100 Marginal social cost Costs imposed on fisherman by plantations using Weevokil $270 At A, reducing production by one ton reduces plantation's profits by $400. A is the banana producers' profit-maximizing outcome. The marginal external cost at A is $670. A is the Pareto optimal outcome. Based on the figure, which of the following statements regarding point A is correct? Marginal private cost 0 0 10,000 20,000 30,000 40,009 50,000 60,000 70,000 80,000 90,000 100,000 Quantity of bananas, Q (tonnes per year) Price
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