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The graph illustrates the market for pesticide with no government intervention. The pesticide factories dump their waste in 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.) If the town owns the lake, what is the quantity of pesticide produced and how much does the town charge the factories to dump waste? Draw a point to show marginal social cost if production is 240 tons. Label it 1. Draw the MSC curve and label it. Draw a point to show the quantity of pesticide produced and the marginal social cost at this point when residents own the lake. Label it 2. Draw a point to show the marginal private cost of producing the efficient quantity. Label it 3. 1080- 960- 840- 720- 600- 480- 360- 240- 120- 0- Price and cost (dollars per ton) 0 S D 120 240 60 180 Quantity (tons of pesticide per week) >>> Draw only the objects specified in the question. 300 G E E

The graph illustrates the market for pesticide with no government intervention. The pesticide factories dump their waste in 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.) If the town owns the lake, what is the quantity of pesticide produced and how much does the town charge the factories to dump waste? Draw a point to show marginal social cost if production is 240 tons. Label it 1. Draw the MSC curve and label it. Draw a point to show the quantity of pesticide produced and the marginal social cost at this point when residents own the lake. Label it 2. Draw a point to show the marginal private cost of producing the efficient quantity. Label it 3. 1080- 960- 840- 720- 600- 480- 360- 240- 120- 0- Price and cost (dollars per ton) 0 S D 120 240 60 180 Quantity (tons of pesticide per week) >>> Draw only the objects specified in the question. 300 G E E

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter8: Market Failure
Section: Chapter Questions
Problem 2P: Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and...
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The graph illustrates the market for pesticide with no government intervention. The pesticide factories dump their waste in 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.) If the town owns the lake, what is the quantity of pesticide produced and how much does the town charge the factories to dump waste? Draw a point to show marginal social cost if production is 240 tons. Label it 1. Draw the MSC curve and label it. Draw a point to show the quantity of pesticide produced and the marginal social cost at this point when residents own the lake. Label it 2. Draw a point to show the marginal private cost of producing the efficient quantity. Label it 3. 1080- 960- 840- 720- 600- 480- 360- 240- 120- 0+ 0 Price and cost (dollars per ton) S D 300 e 120 240 60 180 Quantity (tons of pesticide per week) >>> Draw only the objects specified in the question. G
Transcribed Image Text:The graph illustrates the market for pesticide with no government intervention. The pesticide factories dump their waste in 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.) If the town owns the lake, what is the quantity of pesticide produced and how much does the town charge the factories to dump waste? Draw a point to show marginal social cost if production is 240 tons. Label it 1. Draw the MSC curve and label it. Draw a point to show the quantity of pesticide produced and the marginal social cost at this point when residents own the lake. Label it 2. Draw a point to show the marginal private cost of producing the efficient quantity. Label it 3. 1080- 960- 840- 720- 600- 480- 360- 240- 120- 0+ 0 Price and cost (dollars per ton) S D 300 e 120 240 60 180 Quantity (tons of pesticide per week) >>> Draw only the objects specified in the question. G
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