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1.In the following figure, social MWTP equals private MWTP plus external benefits from production. In this market, the socially2.In the following figure, the marginal abatement cost of abating the 20th unit of emissions is МАС, 80 MAC=80-2E E $200 $40 O3.In the following figure, the socially efficient level of output is equal to MSC-MPC +MEC MPC Demand none of the choices are c4.

1.With an upward sloping marginal damage cost curve that starts at the origin, total damages for 20 units of emissions are equal to the marginal damage cost of the 20th unit times 20.

A.True

B .False

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Answer #1

Q1 Answer is D. Q3.

Social optimal output is decided where social cost (Social MWPT) is equal to Marginal social cost(MSC).

Here both are equal at the output level of Q3.

Q2 Answer is D. can not be determined with the given information.

Q3 Answer is B. Q1.

Socia optimal output is decided where marginal social cost(MSC) is equal to demand curve whic is equal at the output level of Q1.

Q4 Answer is False.

Total damage of 20 units will be = Sum of marginal damage of 20 units.

It is not the marginal damage times 20 units.

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