Suppose a Firm Producing Roof Shingles Imposes a Negative Externality

question 95

Multiple Choice

Suppose a firm producing roof shingles imposes a negative externality on the surrounding area due to the noxious fumes emitted from the plant.The private marginal cost,social marginal cost and marginal benefit associated with the production of the shingles are given by the following equations: MC_P = 5 + 2Q
MC_S = 10 + 3Q
MB = 50 - Q
The marginal external cost at the competitive equilibrium is ________ per unit.

• A)$5
• B)$10
• C)$15
• D)$20
• E)$25

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