The graph illustrates the market for pesticide with no government intervention. When the factories produce pesticide, they also create waste, which they dump into a lake on the outskirts of 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 quantity of pesticide is produced if no one owns the lake? If no one owns the lake, the quantity of pesticide produced is tonnes a week. The efficient quantity of pesticide is tonnes a week.

The graph illustrates the market for pesticide with no government intervention. When the factories produce pesticide, they also create waste, which they dump into a lake on the outskirts of 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 quantity of pesticide is produced if no one owns the lake? If no one owns the lake, the quantity of pesticide produced is tonnes a week. The efficient quantity of pesticide is tonnes a week.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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