Betry and Anna work at the same office in Toronto and they have to attend a meeting in Montreal. They decide to drive to the out- of-town meeting together. Betty is a cigarette smoker and her marginal benefit of smoking a package of cigarettes a day is $40. Cigarettes are $6 a pack. Anna dislikes cigarette smoke, and her marginal benefit of a smoke-free environment is $50 a day. What is the outcome if:

a. Betty drives her car with Anna as a passenger?

b. Anna drives her car with Betty as a passenger? Use the following figure, which illustrates the market for a pesticide with no government intervention, to work Problems 15 to 18. Price and colors per Quantity Jones per week When factories produce pesticide, they also create waste, which they dump into a lake near the town. The marginal external cost of the waste is equal to the marginal private cost of producing the pesticide (that is, the marginal social cost of producing the pes- ticide is double the marginal private cost).