The marginal private cost of a chemical is $100 per ton and its marginal external cost is $20 per ton. What is the marginal social cost of the chemical?
What will be an ideal response?
Marginal social cost equals marginal private cost plus marginal external cost. So the marginal social cost of the chemical is $100 + $20 = $120 per ton.
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The Fed conducts an open market operation and buys $50,000 of government securities from Commerce Bank. The desired reserve ratio is 25 percent. What is the change in Commerce Bank's total reserves and its excess reserves?
What will be an ideal response?
Which of the following is a reason people choose to hold more cash?
a) Interest rates paid on savings and checking accounts at the bank rise dramatically. b) Consumers have more faith in the stability and safety of the financial system. c) Interest rates paid on savings and checking accounts at the bank are near zero. d) Holding cash becomes less convenient.