The following diagram illustrates the situation in the dry cleaning market. The

Question

The following diagram illustrates the situation in the dry cleaning market. The marginal social cost (SMsc) of the pollution rises as the quantity of items cleaned per week rises. In addition, there are two demand curves, one for a smaller city Ds, the other for a larger city, D 18 16 14. Why does the social cost curve (SMsc) have a different slope than the private cost curve (SMPc)? A. O B. ° C. O D. The total social cost of dry cleaning increases as output increases. The marginal private cost of dry cleaning increases as output increases. The marginal social cost of dry cleaning declines as output increases. The marginal social cost of dry cleaning increases as output increases. E. The marginal social cost of pollution is increasing at a faster rate than the marginal private cost of dry cleaning What tax rate per item cleaned will achieve economic efficiency in the smaller city?Enter your response rounded to two decimal places.) 2. Ds What tax rate per item cleaned will achieve economic efficiency in the larger city?(Enter your response rounded to two decimal places.) 1000 1200 1400 1600 1 Quantity items cleaned per week in 1000s) Explain why the tax rate differs from one city to the next. The tax rate differs because O A. the marginal cost of pollution increases with output and cities produce different levels of output. O B. cities produce different levels of output. O C. the marginal private cost of production increases with output, and cities produce different levels of output. D. 0 E. the marginal cost of pollution increases with output. none of the above

Explanation / Answer

1) THe answer is E -) The marginal social cost of pollution is increasing at a faster rate than the marginal private cost of dry cleaning.

because of the slope of marginal social cost and marginal private cost, it is defined that MSC is increase at a faster rate .

2) $3 -- because ( $10-$7 = $3)

3) $3 -- becaue ) $13 -$9 = $4)

4) The answer is D-) The marginal cost of pollution increases with increase in output.

becasue in small state, the output is not much in the large state, therefore, the pollultion is also and thus marginal social cost is less in small state and in large state, the output is large and thus pollution is also large.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.