The figure above shows the costs and benefits associated with producing paper. W

Question

The figure above shows the costs and benefits associated with producing paper. What is the marginal external cost when output is 6 tons? $600 $1,600 $1, 200 $1,000 $400 The figure above shows the costs and benefits associated with producing paper. What is the unregulated competitive market level of output? More than 6 tons 4 tons 6 tons None of the above answers is correct. The figure above shows the costs and benefits associated with producing paper. What is the efficient level of output? More than 6 tons 6 tons None of the above answers is correct. 0 4 tons

Explanation / Answer

8.

MEC = MSC – MPC = $1,600 - $1,000 = $600

Answer: A

9.

The unregulated market level of output is the situation where S = D. It happens at 6 tones.

Answer: D

10.

The efficient level of output is the situation where MSC = MB. It happens at 4 tones.

Answer: B

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