Suppose That an Industry Emits a Chemical That Pollutes the Ground

question 63

Multiple Choice

Suppose that an industry emits a chemical that pollutes the ground water. Without considering the effects of the pollution, the industry has a marginal private cost curve of $M P C = Q + 30$ . The market demand curve is $P = 60 - Q$ , while the marginal social cost curve is $\mathrm { MSC } = 2 \mathrm { Q } + 30$ . How can the optimal level of emissions fee best be depicted on a graph in this problem?

• A) The optimal fee shifts down the marginal private cost of production until it intersects demand at the socially optimal output level.
• B) The optimal fee shifts the demand curve out until it intersects the marginal private cost of production at the socially optimal level of production.
• C) The optimal fee establishes a maximum level of output at the socially optimal level of production.
• D) The optimal fee shifts the marginal private cost of production up until it intersects the demand curve at the socially optimal level of production.

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Definitions:

Endorphins

Naturally occurring peptides in the brain that act as neurotransmitters to reduce the perception of pain and can induce feelings of pleasure or euphoria.

Glial Cells

Non-neuronal cells in the nervous system that support, protect, and provide a scaffold for neurons.

Myelin

A fatty substance that wraps around neurons, increasing the speed at which electrical impulses are passed along the nerve cells.

Neurotransmitters

Chemicals that transmit signals across a synapse from one neuron to another in the brain and nervous system.