(Solved): Attempts Keep the Highest (0.5)/(3) 3. The effect of negative externalities on the optimal quant ...

Attempts

Keep the Highest

3. The effect of negative externalities on the optimal quantity of consumption Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of bolts infoses a constant marginal external cost (MEC) of

per ton. The following graph shows the demand (marginal private benefits, or MPB) curve and the supply (marginal private costs, or MPC) curve for bolts. Use the purple points (diamond symbol) to plot the marginal social costs (MSC) curve when the marginal external cost is

per ton. The market equilibrium quantity is

tons of bolts, but the socially optimal quantity of bolt production is

tons. To create an incentive for the firm to produce the socially optimal quantity of bolts, the government could impose a of bolts.

of

per ton DO MSC LINE PLEASEEEE!!!!!