Suppose the private marginal cost of producing steel were constant at $45/ton and the marginal damage...
Suppose the private marginal cost of producing steel were constant at $45/ton and the marginal damage were increasing MD=2Q, where Q = tons of steel produced.
The social marginal cost of the 100th ton is therefore
Homework Answers
Marginal private cost (MPC) = $45 (Constant)
Marginal damage (MD) = 2Q
Marginal social cost = MPC + MD
Marginal social cost = 45 + 2Q
Put Q = 100
Marginal social cost = 45 + 2(100)
Marginal social cost = $245
The social marginal cost of the 100th ton is $245
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