Suppose That an Industry Emits a Chemical That Pollutes the Ground

question 17

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 MPC = Q+30. The market demand curve is $P = 60 - Q$ , while the marginal social cost curve is MSC = 2Q + 30. What is the socially optimal emissions standard?

• A) 15.
• B) 10.
• C) 5.
• D) 0.

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Definitions:

Expenditures

Outflows of cash or other valuable assets from a person or company to pay for goods or services.

Finished Products

Items or goods that have completed all stages of production and are ready for sale to customers.

Time Period

A specific duration or interval during which certain events occur or conditions are measured.

Selling and Administrative Expenses

Expenses related to the daily operations of a business that are not directly tied to production, including sales promotions, salaries of administrative staff, and office rent.