1.4. The accompanying table shows the total revenue and the total cost that accrue to steel producers...

Question:

1.4. The accompanying table shows the total revenue and the total cost that accrue to steel producers from producing steel.

Producing a ton of steel imposes a marginal external cost of

$60 per ton.

image text in transcribed

a. Calculate the marginal revenue per ton of steel and the marginal cost per ton of steel to steel producers. Then calculate the marginal social cost per ton of steel.

b. What is the market equilibrium quantity of steel production?

c. What is the socially optimal quantity of steel production?

d. What is the optimal Pigouvian tax to remedy the problem created by the negative externality?

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Related Book For book-img-for-question

Economics

ISBN: 978-0716771586

2nd Edition

Authors: Paul Krugman ,Robin Wells

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Question Posted: Oct 02, 2024 04:01 AM

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1.4. The accompanying table shows the total revenue and the total cost that accrue to steel producers from producing steel. Producing a ton of steel imposes a marginal external cost of $60 per ton....
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1.4. The accompanying table shows the total revenue and the total cost that accrue to steel producers...

Question:

Quantity of steel (tons) Total revenue Total cost to producers 1 $115 $10 2 210 30 34 285 60 340 100 5 375 150

Step by Step Answer:

Economics

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