Question

1. A marginal external cost of a product is equal to

A. what the producer has to pay to hire resources to produce another unit.

B. the cost someone other than the producer incurs when another unit is produced.

C. what the consumer must pay when he or she buys the good or service.

D. the cost the producer incurs to produce another unit.

E. None of these answers describes a marginal external cost.

2. The graph shows the benefits and costs associated with wood pulp production. When the firm produces 5 tons of wood​ pulp, marginal private cost equals​ ______ per ton.

A. $900

B. ​$1,000

C. ​$200

D. ​$600

E. ​$700

Answer 1

1.B) The cost someone other than the producer incurs when another unit is produced.

A marginal external cost of a product is equal to the cost someone other than the producer incurs when another unit is produced.

2.C) $ 200

When firm produce 5 tons of wood pulp.marginal private cost equals $ 200 per ton.