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

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

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 44P: In the Land of Purity, there is only one form of pollution, called gunk. Table 12.14 shows possible...

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