-The Figure Above Provides Information for a Factory That Produces

question 108

Multiple Choice

-The figure above provides information for a factory that produces chemicals that pollute a waterway. The waterway is used by water skiers. If the waterway is owned by a water ski club and the Coase theorem applies, then the factory will produce ________ tons of chemicals a week.

• A) 1 ton
• B) as many tons as possible
• C) 3 tons
• D) 5 tons

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Definitions:

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.

Marginal Product

The additional output that is generated by employing one more unit of a specific factor of production while holding other factors constant.

Labor

Employing human mental and physical work in generating services and manufacturing goods.

Workers

Individuals engaged in any form of economic activity or labor, typically for the purpose of earning wages or salary.