Options for 1- 1.5, 2, 2.5, 3, 3.5, 4, 4.5, 5, 5.5.Options for 2- 1.5, 2, 2.5, 3, 3.5, 4, 4.5, 5, 5.5Options for 3- subsidy and tax

Post-Lecture Quiz (Ch 10) Consider the market for bolts. Suppose that a hardware factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of bolts imposes a constant external cost of $245 per ton. The following graph shows the demand (private value) curve and the supply (private cost) curve for bolts. Use the purple points (diamond symbol) to plot the social cost curve when the external cost is $245 per ton. 700 630 8 Social Cost 8 Supply (Private Cost) PRICE (Dollars per ton of bolts) O Demand (Private Value) N 3 5 QUANTITY (Tons of bolts) The market equilibrium quantity is _ tons of bolts, but the socially optimal quantity of bolt production is tons. of $ per ton To create an incentive for the firm to produce the socially optimal quantity of bolts, the government could impose a of bolts