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9) Mr. Barnes operates a power plant in the local market. Mr. Barnes' marginal cost function is: MC(q) = 2 + 0.1q. Mr. Barnes
9) Mr. Barnes operates a power plant in the local market. Mr. Barnes' marginal cost function is: MC(q) = 2 + 0.1q. Mr. Barnes can sell all the output he produces for $9 per unit. (This means that the demand curve is flat at P = 9.) In generating power, Mr. Barnes also emits pollution that causes damage to the local community. The marginal external cost of his production is: MEC(q) = 0.05q. What is the socially optimal amount to produce?
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Managerial Accounting Decision Making and Motivating Performance
Authors: Srikant M. Datar, Madhav V. Rajan
1st edition
132816245, 9780132816243, 978-0137024872
