The marginal social cost of a chemical is $100 per ton and its marginal private cost is $85 per ton. What is the marginal external cost of the chemical?
What will be an ideal response?
Marginal external cost equals marginal social cost minus marginal private cost. So the marginal external cost of the chemical is $100 - $85 = $15 per ton.
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Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03. This means that
A) beer and wine are substitutes and wine is a luxury good. B) beer and wine are substitutes and wine is an inferior good. C) beer and wine are complements and wine is a luxury good. D) beer and wine are complements and wine is an inferior good.
What does it mean if the purchasing power in 1950 was 4.15 relative to the 1982 base year?
a. It took $4.15 in 1950 to buy what $1 bought in 1982. b. The average price level in 1982 was five times as high as in 1950. c. $4.15 in 1950 had the same nominal money value as $1 in 1982. d. It took $4.15 in 1982 to buy what $1 bought in 1950. e. Nominal prices have increased by more than 400 percent between 1950 and 1982, but the real value of money has not changed.