The External Marginal Cost of Producing Coal Is MC_external =

question 98

Multiple Choice

The external marginal cost of producing coal is MC_external = 6Q while the internal marginal cost is MC_internal = 4Q.The inverse demand for coal is given by P = 120 − 2Q.If the government taxed output at $2 per unit,what would a competitive industry produce?

• A) 10
• B) 20
• C) 15
• D) 8