It is discovered that production of painclear damages groundwater quality - this affects just one party:...

Transcribed Image Text:

It is discovered that production of painclear damages groundwater quality - this affects just one party: Greenview Nature Park (a park run by the local council which people can access, for free, for recreation). The value of the damage caused is 48 per litre of paint produced - so the pollution damage caused when output is 1 litre = 48, the 2nd litre causes another 48 of damage, so pollution damage caused when output is 2 litres = 96. This damage happens and is the same whenever XY produces, whatever the level of output (same if it produces 1 litre of or 1 000 000 litres of painclear each additional litre imposes an additional 48 of pollution costs). The drug has no side effects on consumers. (the clarifying information in red was added on 21/12/23) 2. Create and explain a new diagram which shows relevant costs, price and levels of output if XY produced the optimal quantity of painclear from a societal perspective. It is discovered that production of painclear damages groundwater quality - this affects just one party: Greenview Nature Park (a park run by the local council which people can access, for free, for recreation). The value of the damage caused is 48 per litre of paint produced - so the pollution damage caused when output is 1 litre = 48, the 2nd litre causes another 48 of damage, so pollution damage caused when output is 2 litres = 96. This damage happens and is the same whenever XY produces, whatever the level of output (same if it produces 1 litre of or 1 000 000 litres of painclear each additional litre imposes an additional 48 of pollution costs). The drug has no side effects on consumers. (the clarifying information in red was added on 21/12/23) 2. Create and explain a new diagram which shows relevant costs, price and levels of output if XY produced the optimal quantity of painclear from a societal perspective.

Answer rating: 100% (QA)

Optimal Quantity for Painclear Production Societal Perspective Heres a diagram representing the optimal quantity of painclear production from a societ... View the full answer