The Following Table Shows the Marginal Private Cost (MPC)and the Marginal

question 159

Essay

The following table shows the marginal private cost (MPC)and the marginal social cost (MSC)of a chemical factory.
$$\begin{array}{l}\text { Tons af }\\\begin{array} { l l l } \text { Chenicals } & \text { MPC } & \text { MSC } \\\hline 1 & 100 & 120 \\2 & 110 & 130 \\3 & 120 & 140 \\4 & 130 & 150 \\5 & 140 & 160\end{array}\end{array}$$ Answer the following questions:
(1)What is the marginal cost of the factory's externality? Is it constant at all quantities?
(2)If the factory is a perfectly competitive firm and is not required by the government to internalize its external cost,how many tons should the factory produce,given that the market price of a ton of chemicals is $130?
(3)If the factory is a perfectly competitive firm and is required by the government to internalize its external cost,how many tons should the factory produce,given that the market price of a ton of chemicals is $130?
(4)Draw a graph illustrating your answers.

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