ZAPCO Refinery Is Currently Producing 100,000 Barrels of Refined Oil

question 38

Multiple Choice

ZAPCO Refinery is currently producing 100,000 barrels of refined oil per day. The marginal cost of this production is $40 per barrel and the marginal external cost is $30 per barrel. Suppose the marginal social benefit is $65 per barrel. In this case, ZAPCO is:

• A) imposing too much harm on the environment and should cut back production.
• B) is producing an efficient amount.
• C) is producing an amount less than the efficient amount.
• D) could make society better off by increasing production.

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Definitions:

Prostate

A gland in the male reproductive system that surrounds the urethra and produces a fluid that is part of semen.

Vas Deferens

A duct that conveys sperm from the testicle to the urethra, playing a crucial role in male reproductive system.

Sebaceous Cysts

Noncancerous, closed pockets of tissue filled with fluid or other material, often found on the skin.

Scrotum

an external sac of skin that encloses the testicles in males, regulating temperature for sperm production.