A.) In the city of Econoville, the marginal social cost of garbage disposed is: MSCd (gd) = 10, where gd is a 50 gallon drum of garbage disposed. The marginal cost of recycling is: MSCr (gr) = 2gr, where gr is a 50 gallon can of recyclables collected. The marginal benefit for the resident of garbage removed from the residence is: MB(gd, gr) = 800 - 2(gd + gr). At an economically efficient level, how many 50-gallon cans of materials a resident shall recycle? (Assuming most of residential waste generated can be recycled, i.e., the resident can recycle as much as desired.)

B.) Given the information above and acknowledging garbage disposal has negative externalities and recycling has positive externalities, which of the following scenarios would you recommend for garbage and recycling services in the city of Econoville?

A. No charge to residents for either garbage disposal or recycling.

B. Charges a fee of $10 to residents for each 50 gallon can of trash the city garbage service collects from their residence, and $20 for recyclables the city collects from their residence.

C. Charges a fee of $2 to residents for each 50 gallon can of trash the city garbage service collects from their residence (and recycling is free).

D. Charges a fee of $20 to residents for each 50 gallon can of trash and $10 for recyclables the city collects from their residence.

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