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29. With no government action to control pollution, what is the marginal social cost of the electricity generated and the deadweight loss created? With 400
29. With no government action to control pollution, what is the marginal social cost of the electricity generated and the deadweight loss created? With 400 kilowatts of electricity being produced, the marginal social cost is 160 per kilowatt. To calculate the deadweight loss, it is necessary to determine the efficient quantity of electricity. That quantity is 300 kilowatts per day because that is the quantity at which the marginal social cost, 120 per kilowatt, equals the marginal social benefit (the price from the demand curve, also 120). The deadweight loss then equals the area of the triangle with a base equal to the difference between the efficient quantity and the equilibrium quantity, 100 kilowatts, and a height equal to the marginal external cost at the equilibrium quantity, 80 per kilowatt. The deadweight loss equals 12 x 100 kilowatts per dayx 80 per kilowatt, which is $4 per day
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