Marginal Cost and Marginal Benefit Quantity (millions of megawatts) 0.5 1.0 1.5 2.0 2.5 3.0 MB private $130 115 100 85 70 45 MC private $70 75 80 85 90 95 MC external $ $ MC social Instructions: In parts a and b, enter your answers as a whole number. In part c, round your answer to one decimal place. a. What is "private quantity" of electricity Texarkana Electric Company will produce each year? million megawatts per year Now assume the production of electricity also produces sulfur dioxide (a precursor to acid rain). The external cost of the sulfur dioxide increases by $40 for each 0.5 million megawatts produced. b. Fill in the external marginal cost (MCexternal and the social marginal cost (MCsocial columns in the table above. c. What is the socially optimal amount of electricity for Texarkana to produce if all costs and benefits are considered? million megawatts per year

Marginal Cost and Marginal Benefit Quantity (millions of megawatts) 0.5 1.0 1.5 2.0 2.5 3.0 MB private $130 115 100 85 70 45 MC private $70 75 80 85 90 95 MC external $ $ MC social Instructions: In parts a and b, enter your answers as a whole number. In part c, round your answer to one decimal place. a. What is "private quantity" of electricity Texarkana Electric Company will produce each year? million megawatts per year Now assume the production of electricity also produces sulfur dioxide (a precursor to acid rain). The external cost of the sulfur dioxide increases by $40 for each 0.5 million megawatts produced. b. Fill in the external marginal cost (MCexternal and the social marginal cost (MCsocial columns in the table above. c. What is the socially optimal amount of electricity for Texarkana to produce if all costs and benefits are considered? million megawatts per year

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 43P: A city currently emits 15 million gallons (MG) of raw sewage into a lake that is beside the city....

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